TIE’s first half year 2010

TIE Holding N.V. (“TIE”) hereby publishes its First half year 2010 Unaudited Condensed Consolidated Interim Financial Statements, for the 6 months ended March 31, 2010.

Hoofddorp, The Netherlands

TIE reports First half year 2010 Total Income of € 5.62m (6M_2009: € 5.53m) and EBIT of € -234k (6M_2009: EBIT of € 338k) and a Total Comprehensive Income of € -223k (6M_2009: € 344k).

In the continued fragility of world markets, our total Income, for the first six months 2010, in North America increased by 9% (in $). In the Netherlands income declined by 1% and in the Rest of World (ROW) it increased by 14% compared to the first six months last year. The foreign currency rate effect (EUR/USD) on Total Income for the First six months had a negative effect of € 193k.

In the First six months, License Income increased by 71%, while Consultancy Income decreased by 4%, Maintenance Income decreased by 13% and SaaS Income decreased by 13%, compared to the first six months of FY 2009. Other Income, increased by 51% resulting from the sale of Edge software to a third party (net € 176k) and participation in European Commission Supported Projects yielded € 386k (2009:€ 338k EU projects and € 30k other income).
The Company experienced a difficult second quarter 2010 (Jan-March) resulting from customers that went out of business, an unexpected decrease in messaging/hosting services and termination of several large volume contracts. Expected new sizable orders for our Content Syndication and E-commerce platform were unfortunately delayed by several major customers.

Total Operating Expenses increased by € 776k compared to first six months 2009. The depreciation of the USD against the EURO had a positive effect on costs of € 132k. A provision of € 250k had been made for legal and redundancy costs and for legal expenses to protect the IP rights of the Company. Bad debts expenditure for the period amounted to € 120k (2009: -€ 44k).
In executing our growth strategy, the Company hired new sales staff for growing E-commerce and Content Syndication markets.

Shareholder’s Equity amounted to € 3.52m (at September 30, 2009 € 2.42m), with Equity totaling to € 4.01m (At September 30 2009: € 4.09m).

The Company generated a positive net cash flow, during the first six months 2010, from operating activities of € 495k (first six months 2009: € 609k).

The net cash position of the Company per March 31, 2010 amounted to € 517k (March 31, 2009: € 569k).

Jan Sundelin, CEO said: ’The Company’s results were clearly disappointing as the investment in new sales staff and marketing expenses for our E-commerce and Content Syndication Platform has not yet been realized despite serious interest from potential customers. As a result of the continued economic uncertainty we experienced a decline in volume of our Business Integration hosting/messaging business as well as termination of contracts and the fallout of bankrupt companies. One time redundancy expenses were taken as well as legal expenses, in order to protect our IP rights. Despite these situations we expect that the interest for E-commerce and Content Syndication will convert into new business. Based on our review of the expected order intake, the management of the Company does not consider taking special measures’.

Further details with respect to these First Six Months Results can be found in the separate Condensed Consolidated Interim Financial Statements for the six month period ended on March 31, 2010, which are attached hereto and are reported in accordance with IAS 34 Interim Financial Reporting. These Condensed Consolidated Interim Financial Statements reported therein are unaudited.

Profile TIE

TIE (NYSE Euronext: TIE Holding) delivers web centric, software based solutions that enable all trading partners in the supply chain to work seamlessly together on the major E-commerce processes of marketing, sales and fulfillment. With TIE Kinetix, TIE provides a Total Integrated E-commerce concept, embracing three innovative platforms for Business Integration (including e-invoicing, XML/EDI data synchronization), Content Syndication and E-commerce. The Total Integrated E-commerce solutions minimize the energy needed for a transaction lifecycle throughout the supply chain which enables our customers to reduce cost and maximize revenue and profit.
TIE has more than two decades of experience in developing and implementing global E-commerce standards. TIE is a listed company with offices in the United States, Australia, France and the Netherlands.

Further information:                                                

TIE Holding N.V.

Jan Sundelin, CEO

Antareslaan 22-24
2132 JE Hoofddorp
The Netherlands

T:      +31-20-658 93 33
F:       +31-20-658 90 01

E:       info@TIEHolding.com
W:      www.TIEHolding.com

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TIE Holding N.V. Unaudited Condensed Consolidated Financial Statements

For the half year ended March 31, 2010

Key Financials

 

Financial Results

Financial results for the six months ended March 31, 2010

Introduction

Total Comprehensive Income for the six months amount to € -223k (2009: € 344k).
Income After Tax for the six months amounts to € -447k (2009: € 144k). Revenues for the half year amount to € 5.6m (2009: € 5.5m). The weighted average USD to EUR exchange rate for the first half year of 2010 was 1.43 compared to 1.31 over the same period in 2009, a depreciation of 9%. The half year closed at 1.35 compared to 1.47 at year end.

The Company has set up a provision of € 250k for legal and redundancy costs during its second quarter.

The 2009 comparatives include 4 months of MamboFive B.V. as the Company was acquired in December 2008.

Revenues

The following table provides the breakdown of revenues by category (and the percentage of total net revenues represented by each category) for the financial periods indicated:

Revenues by category

Overall Total Income increased by € 85k during the first six months 2010 compared to the first six months 2009.

License revenues for the first six months 2010 are € 374k (71%) higher compared to the first six months of 2009, especially the first quarter license sales were good.

Maintenance revenue is € 211k (13%) lower for the first six months 2010 compared to the 2009 comparative periods. This number is influenced by the Edge sale, contracts that have been cancelled by customers, customers that went out of business and due to replacement of old TIE products by the Smart Start creating a time gap in maintenance. Consultancy is € 47k (4%) lower compared to last year’s six months. The US business suffered from customers delaying the implementation of licenses purchased during the first quarter 2010 and the Netherland operation was effected by to the resignation of 2 consultancy employees. SaaS revenue decreased by € 222k (13%) compared to the first half year last year. The number is influenced by the sale of the Edge business and lower volume of hosting services.

Other income consists predominantly of government grants with respect to the EC supported STASIS, NetChallange, SO4ALL, NESSI2010 and NEXOF-RA (totaling to € 386k) and the sale of the Edge software to a third party (€ 176k). As from the fourth quarter 2009 WBSO is not reported as Other Income but deducted from the personnel costs, the comparatives 2009 have been adjusted for this. Direct Purchase Costs decreased by € 119k, comparing first six months 2010 with 2009, resulting from the lower business level and consist of services and licenses purchased from third parties.

The depreciation of the USD against the EURO had a negative effect on Total Income of € 193k compared with last year.

We experienced serious interest for our Content Syndication Platform by large international companies, however we noticed that in the markets, we are present, US, Europe and Asia-Pacific these companies were not willing to release the required budgets for this product during the second quarter 2010.

Operating Expenses

The following table provides a breakdown of the total operating expenses for the financial periods indicated:

Operating expenses by category

The operating expenses increased by € 776k, resulting from the set up of a provision for redundancy costs and legal cost as described above for € 250k in the Netherlands, higher salary expenses due to the hiring of new staff for the International business € 160k, additional personnel costs MamboFive € 125k (2009 only 4 months included), during the second half year 2009 higher accommodation expenses € 81k (due to a benefit of € 55k in 2009, higher accommodation costs in France and relocation costs for the marketing director), bad debts write off € 120k (in 2009 a release was booked of € 44k), increased marketing and communication costs of € 77k and higher depreciation costs of € 76k. The depreciation of the USD against the EURO had a positive effect on the operating expenses of € 132k compared to last year.

The 2009 employee benefit comparative costs have been adjusted resulting from the above mentioned WBSO adjustment.

Depreciation, Amortization and Impairment

The depreciation and amortization expense increased during the first half year 2010 compared to 2009. The depreciation of capitalized R&D increased; in 2007 and 2008 (first 6 months) R&D costs were impaired in the Netherlands, lowering the annual depreciation costs of R&D. Since the second half of 2008 no impairments occurred resulting in a higher depreciation charge.

Though the company suffered from a loss during the second quarter 2010 it is management’s belief that impairment is not required.

Financial Income and/or Expense

Interest expenses relates to bank charges, interest paid on the Credit facility, interest accrual on the loans of Alto Imaging Group NV and Jalak Investments BV and the discounted interest on the last part of the MamboFive BV purchase price. The exchange rate differences are realized exchange differences between the EURO and USD.

Corporate Income Tax

The deferred tax movements represent non-cash movements of temporary differences predominantly for goodwill and deferred revenue between commercial books (in accordance with IFRS) and US tax books. The income tax charge relates to normal tax rates on profits made.

Re-estimation Future Guidance

The outlook for the fiscal year 2010 is affected by the uncertainty regarding the economic development World Wide. Though the first signs of economic recovery were present during the first quarter 2010 (Oct Dec) we experienced that the second quarter 2010 (Jan-March) was weak. The signs of improvement in the US from the first quarter didn’t come to further execution in the second quarter and also the European and Asian-Pacific markets remain hesitating. However if the economic recovery continues to develop the Company might benefit from this recovery in its second half year. We continue to further develop our TIE Kinetix portfolio in combination with an increased marketing effort and sales power. Management believes that TIE will harvest the benefits of it in the near future.

Segment Information:

The Netherlands

Total Income in the Netherlands shows a decline of 1% (€ 38k) compared to the first six months last year (MamboFive only 4 months). License revenue grew by € 89k (50%) and consultancy was up by € 29k (4%). While SaaS revenues decreased by € 159k (17%) predominantly resulting from a decrease in hosting services terminated per the second half year 2009 and Maintenance revenue was down by € 16k (3%), due to contract cancellations resulting from the time gap between replacement of old TIE products by the new Business Integration tool Smart Start. Other income contributed € 387k over the first half year against € 338k other income in the first 6 months of 2009 and € 30k other income in 2009.

The employee costs are higher € 213k. This is caused by the set up of a redundancy provision, temporary staff hired and MamboFive is included for 6 months (2009: 4 months). Depreciation and amortization costs were € 141k for the first 6 months 2010; during the first 6 months of 2009 the costs were € 41k. The increase is described above under depreciation, amortization and impairment.

Other operating expenses increased by € 322k: The inclusion of MamboFive for 6 months in 2010 (2009: 4 months) effect approximately 81k, bad debts € 111k, in 2009 there was a benefit on accommodation expenses of € 55k and increase of communication and marketing expenses for € 75k.

North America

Revenues in North America increased by 9% in USD, from USD 2,663k to USD 2,918k for the first six months 2010 compared to previous year predominantly caused by the sales of Edge software to a third party for a net amount of USD 259k. License sales increased by USD 314k resulting from strong sales in the first quarter 2010 (Oct-Dec). Consultancy decreased by USD 62k (15%), despite the high license sales Customers postponed the implementation of the licenses bought. Maintenance and support went down by USD 169k resulting from the sale of Edge software to a third party (USD 105k), customers that were acquired by other parties cancelling the maintenance contracts and bankruptcy of a few customers. The SaaS revenues decreased by USD 86k (14%) caused by the sale of Edge software to a third party USD 75K and lower hosting volumes. The effect of currency exchange rate developments on US revenues expressed in EUR is substantial. Overall revenue increased for the North America’s expressed in EUR by € 4k, increasing from € 2,028k (6m_2009) to € 2,032k. The depreciation of the USD had a negative effect of € 193k on Net Income.

The employee costs over the first six months 2010 decreased by USD 66k.Resulting from less staff in the US compared to last year. However in EURO the costs decreased by € 147k compared to last year resulting from the depreciation of the USD against the EURO. The other costs decreased by USD 206k, mainly caused by recharge of costs. In Euro the effect was a decrease of € 59k as a result of the appreciation of the USD versus the EURO by 9%.

Rest of World

Revenue during the first six months 2010 in the Rest of the World is up by € 119k (+14%) compared to revenue in the first six months of 2009. Main growth areas are licenses € 84k, SaaS up 39k, Maintenance & Support up € 5k while Consultancy dropped by € 8k compared to last years first 6 months. Total employee costs increased by € 130k (33%) caused by increased number of staff for TIE International, TIE Asia-Pacific and TIE France. Other Operating expenses increased by € 73k compared to the same period last year. Though ROW did grow, we experienced the hesitation of potential customers in releasing budgets especially for our Content Syndication Platform.

Holding

The Holding expenses increased from € 537k first 6 months 2009 to € 816k first 6 months 2010. Staff costs increased by € 56k resulting from newly hired staff. Other operating expenses increased by € 227k. This is caused by the set up of a provision of € 130k for legal charges, accommodation expensed € 18k, communication expenses € 18k, travel € 10k, marketing costs € 35k and other costs of € 16k.

The Company operates in a single business segment, providing software and related services in several markets aggregated into geographical areas. These geographical areas are designated reportable segments in the most recent annual financial statements. Revenues are allocated to geographical areas based on the location of the customer.

 

 

For the six months ended March 31, 2010:

For the six months ended March 31, 2009:

*) see page 1 on WBSO.

For the three months ended March 31, 2010:

For the three months ended March 31, 2009:

*) see page 1 on WBSO

Financial Position

The Equity position of the Company remains positive. Shareholders’ Equity as per March 31, 2010 amounts to € 3,510k (September 30, 2009: € 2,417k).
Total Equity as per March 31, 2010 amounts to € 4,005k (September 30, 2009: € 4,078k) including convertible bonds amounting to € 495k (September 30, 2009: EUR 1,661k).

Development (R&D)

In the first six months of financial year 2010, the Company has capitalized € 255k, compared to € 271k for the first six months 2009. Development was spent primarily on the next generation of the Messaging Portal and the Content Syndication Platform.
Significant R&D effort is being invested in the EC supported, SO4ALL, NESSI2010 and NEXOF-RA and STASIS projects. These projects have not been capitalized but are expensed through the Income Statement.

 

 

Interim Consolidated Balance Sheet

As at March 31, 2010

Interim Consolidated Balance Sheet

As at March 31, 2010

Interim Consolidated Statement of Comprehensive Income

For the 6 months ended March 31, 2010:

Interim Consolidated Statement of Changes in Equity

(unaudited)

Equity movement relates to the conversion of Convertible Bonds into Shares for € 1166k.

Share based payments amounting to € 150k.

Comprehensive Income for the period of - € 223k.

 

 

 

Interim Consolidated Cash Flow Statement

2009: one time items adjusted for comparatives, no effect from cash flow on operating activities.

Corporate Information

TIE bridges the gap between online and traditional business, through contributing to the online business of our customers. TIE is a strong provider of solutions that have proven to lower costs, increase revenue and optimize business processes.

TIE Kinetix empowers several Platforms such as Business Integration and Content Syndication which meet the evolving needs of our customers. Our power to connect different applications and processes of our customer with those of your external trading partners makes TIE unique. With the addition of our latest MamboFive eCommerce Platform, we can provide our customers with complete, state of the art solutions for all their Business-to-Business integration and operational needs.

With more than 2 decades of experience, stretching involvement in the European Projects and the Standardization Committee of the United Nations, we are a key contributor to the development and implementation of global E-commerce standards. Connecting businesses, remaining at the forefront of technology, providing quality, superior value, a clear Return on Investment (ROI) and usability to our customers and transparency constitute TIE’s core values.

TIE Holding N.V. is a public company incorporated in the Netherlands with its registered address at Antareslaan 22-24, Hoofddorp. Subsidiaries are located in France, the Netherlands and the U.S.A. TIE is listed on the NYSE EuroNext Stock Exchange of Amsterdam.

The unaudited condensed consolidated financial statements for the half year ended March 31, 2010 are authorized for issue through a resolution of the Management Board dated May 25, 2010.

Notes forming part of the financial statements for the half year ended March 31, 2010

1 ACCOUNTING POLICIES

Basis of preparation

The interim condensed consolidated financial statements for the six months ended March 31, 2010 have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements as at September 30, 2009.

Significant accounting policies

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended September 30, 2009.

2 Segment Information

The Company operates mainly in one business segment, but operates in different countries, through subsidiaries. All subsidiaries provide similar products and services. The segment information is disclosed above.

3 Seasonal Effects

There are little seasonal effects on the operations and therefore the results of the Company. Despite the holiday season the second half year (April-September) sales have proven to be strong during this period over the last few years. However there may be some effect on Consultancy and R&D development as a result of the holiday’s season. Therefore the Company may face some impact on the results of the second half year.

4 Intangible Assets

During the first six months of 2010 the Company capitalized € 255k (6M_2009: € 271k). An amount of € 183k of fully depreciated R&D costs has been divested as the assets were no longer used.

5 Cash

On March 31, 2010 the Company held a net positive cash and cash equivalents position of € 527k (September 30, 2009 € 457k). 
The major events influencing the cash position of TIE during the first half year are:

Repayment of the Jalak Investment B.V. loan of € 100k plus interest on November 30, 2009; Payment of the remaining purchase price of TIE France S.A.S. of € 66k, on December 16, 2009; Repayment of the Alto Imaging Group N.V. loans of € 200k plus interest on December 31, 2009.
The Company used the Rabobank facility of € 350k, as obtained per September 30, 2009, for an amount of €90k per March 31, 2010.
The Company has been cash flow positive from its operations during the first half year 2010.

6 Subsidiaries

The Company called the option on the remaining 24,5% of MamboFive per April 1, 2010 in accordance with the purchase schedule as agreed in the Sales Purchase Agreement (SPA) of December 19, 2008. The share transaction has been completed on April 19, 2010. Based on the conditions set in the SPA the Company has consolidated 100% of MamboFive B.V. since December 1, 2008. The remaining 24,5% was paid by the issue of Convertible Bonds, amounting to € 450k, to the old MamboFive shareholders. 
These Convertible Bonds have a one year lock up and a five year maturity period at a fixed conversion rate of € 0.188.

7 Acquisitions

There have been no acquisitions during this reporting period, except the share transfer as described under 6 Subsidiaries.

8 Convertible Bonds

Since September 30, 2009 the Company reports the following movements in the Convertible Bonds:

Note 1: Converted on March 1, 2010 into 4,660,000 shares.
Note 2: Converted on April 6, 2010 into 4,500,000 shares.
Note 3: Issued in relation to the purchase of the remaining 24,5% shares in MamboFive B.V., as described under 6, amounting to € 450k.
Note 4: Converted on October1, 2009 into 7,000,000 shares.

Movement schedule of Convertible Bonds for the reporting period:

Subsequent to the current reporting period, ending on March 31, 2010:
On April 1, 2010 the Company issued Convertible Bonds amounting to € 450k in relation to the payment of the remaining 24,5% of the MamboFive B.V. shares to the old shareholders, as described under 6 in more detail.

On April 6, 2010 Convertible Bonds (dating from April 1, 2009) amounting to € 450k were converted into Shares.

9 Options

During the reporting period the movement of stock options is as follows:

Options granted or acquired are described below. Personnel options cancelled relate to staff that has left or is leaving TIE. The Management Board received 750,000 options based on the performance 2009 and approved during the annual shareholders meeting on March 10, 2010. The personnel options were issued on January 5, 2010 resulting from the annual option plan.
On April 6, 2010 a number of 1,065,000 options have been converted into shares, including 265,000 options of the Management Board.

10 Equity

The increase of share capital and number of Shares during the reporting period resulted from the conversion of Convertible Bonds amounting to € 1,166k and representing 11,660,000 Shares.

The total number of Common Shares per March 31, 2010 is 77,701,804 (Sept. 30, 2009 64,976,818).

The movement of Equity is summarized under the Interim Consolidated Statement of Changes in Equity.

11 Pending Litigations

Since December 2007 the Company has been involved in discussions and consequently in legal proceedings with SAMAR B.V. All claims in the summary proceedings have been instantly dismissed at the court hearing of February 15, 2008. Currently the Company awaits the outcome of the standard procedure, which is currently scheduled for June 23, 2010. The Management Board is confident in the outcome of the legal procedure and does not expect any further costs, except legal costs.

On November 20, 2009, TIE initiated an investigation on a potential infringement on the Content Syndication Platform. On May 7, 2010 the judge pronounced a ruling in summary proceedings, dismissing TIE’s claim and ruling payment of the costs of litigation of the defendants. TIE has lodged an appeal against the ruling.

12 Related Parties

During the reporting period from October 1, 2009 – March 31, 2010 the following related party transactions occurred:

  • a) Management Board
    Mr. J. Sundelin (CEO) was granted 750,000 options during the Shareholders Meeting on March 10, 2010. Subsequent to the current reporting period, on April 6, 2010, Mr. J. Sundelin converted 265,000 options into Shares of TIE.
  • b) Alto Imaging N.V., is a related party which holds a shareholding in TIE of 22% of the shares. On December 31, 2009 TIE repaid a loan to Alto Imaging N.V. amounting to € 200k plus interest. On November 30, 2009 TIE repaid a loan to Jalak Investments B.V. amounting to € 100k plus interest. Jalak Investments B.V. is controlled by Alto Imaging N.V.
  • c) On December 16 the Company paid € 66k to the manager of TIE France S.A.S., resulting from the purchase of the remaining shares on November 11, 2008.
  • d) Subsequent to the current reporting period, on April 1, 2010, two managers and former Shareholders of MamboFive B.V. received Convertible Bonds amounting to € 373k (out of € 450k). The Convertible Bonds received on April 1, 2009 were converted into shares.

13 Changes in Accounting Policies and Disclosures

  • In the current year TIE has applied the following new standards and/or interpretations: IAS 1 and 32 Presentation of Financial Statements (Revised/amendments, effective for annual periods beginning on or after January 1 2009);
  • IFRS 3 Business Combinations and IAS 27R Consolidated and Separate Financial Statements, issued in January 2008, effective for financial years beginning on or after July 1, 2009;
  • IFRS 2 Share-based Payment Vesting Conditions and Cancellations (amendment, effective for annual periods beginning on or after January 1 2009);
  • IAS 23 Borrowing Costs (amendment, effective for annual periods beginning on or after January 1, 2009);
  • IAS 38 Intangible Assets (amendment effective for financial years beginning on or after July 1, 2009);
  • IAS 39 Financial Instruments (amendment, effective for financial years beginning on or after July 1, 2009).

The following standards and/or interpretations became effective during the reporting period but did not affect the Company’s results:

  • IFRIC 15 Agreements for the Construction of Real Estate (effective for annual periods beginning on or after January 1, 2009);
  • IFRIC 17 Distribution of non-cash assets to owners is prospectively applicable for financial years beginning on or after July 1, 2009;
  • IFRIC 18 Transfer of Assets from customers (effective for annual periods beginning on or after July 1, 2009);
  • IAS 19 Employee Benefits (amendment, effective for annual periods beginning on or after January 1, 2009).

14 Subsequent Events

On April 1, 2010 TIE called the second option of MamboFive B.V. to acquire the remaining 24,5% shares. TIE now holds 100% of the MamboFive B.V. shares. As per the Sales Purchase Agreement (SPA) the Company issued on April 1, 2010 Convertible Bonds to the old MamboFive shareholders, amounting to € 450k.

On November 20, 2009, TIE initiated an investigation on a potential infringement on the Content Syndication Platform. On May 7, 2010 the judge pronounced a ruling in summary proceedings, dismissing TIE’s claim and ruling payment of the costs of litigation of the defendants. TIE has lodged an appeal against the ruling.

15 Statement of the Management

The Management Board has considered and approved the interim condensed consolidated financial statements for the period October 1, 2009 – March 31, 2010.
The interim condensed consolidated financial statements are unaudited and have been prepared in accordance with IAS 34 “Interim Financial Reporting” as adopted by the EU.

We consider the accounting policies applied to the effect that the interim condensed consolidated financial statements give a true and fair view of the Group’s assets, liabilities and financial position as at March 31, 2010 and of the results of the Group’s operations and cash flow in the period October 1, 2009 – March 31, 2010.

Hoofddorp, May 25, 2010

J.Sundelin
CEO

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