RNS Number:8050O
Intec Telecom Systems PLC
19 August 2003
Intec Telecom Systems PLC - Unaudited results for the nine months ended
30 June 2003
EBITDA up 225% to #2.6 million; operating cash inflow increased to #5.5 million
Intec Telecom Systems PLC ("Intec" or "the Company"), a leading provider of
telecoms Operations Support Systems ("OSS"), is pleased to announce its
unaudited results for the nine months ended 30 June 2003. Substantial
improvements in operating expenses compared to the equivalent period in 2002 ("
9m 2002"), combined with revenues that have proved robust in a difficult and
competitive business environment, have allowed the Company to approximately
triple EBITDA profitability and to deliver positive operating cashflow of #5.5
million. Adjusted earnings per share ("EPS") has also increased to earnings of
0.53p (9m 2002 - adjusted loss per share of 0.66p.)
The final quarter of 2003 has begun well, with a number of important new deals
already signed after the quarter end. Although we are still subject to many
external factors and new business remains to be closed, current visibility
allows us to be cautiously confident, as in previous years, of meeting full year
expectations.
HIGHLIGHTS
* Nine months' revenues of #33.2 million (9m 2002: - #34.1 million) despite
the impact of significant depreciation of the US Dollar affecting 46% of
revenues.
* 225% increase in earnings before interest, tax, depreciation, and
amortisation ("EBITDA") to #2,596,000 (9m 2002: #800,000).
* Positive operating cashflow of #5.5 million (9m 2002: inflow of #0.8
million) - the year to date cash inflow is twice the 2002 full year figure.
* Adjusted earnings per share of 0.53 pence (9m 2002: adjusted loss per
share of 0.66 pence).
* Recurring revenue, up 22% compared to the same period in 2002, now
represents 53% of turnover.
* Loss before tax was #3.9 million (9m 2002: loss of #12.8 million), after
amortisation of goodwill and intangible assets of #5.3 million (9m 2002:
#12.2 million) and depreciation of #1.4 million (9m 2002: #1.3 million).
* 71 new name customers, including 31 from the acquisition of the Settler
business from Ericsson.
* Customer installations reach 476 with important wins in Australia, China,
Colombia, the Czech Republic, India, Ireland, Italy, Jamaica, South Africa,
Venezuela, the UK and the US.
* Intec remains fully funded with cash and cash equivalent investments
increased to #14.0 million (30 June 2002: #11.8 million) after payment of
#3.1 million for the Settler business.
* Intec wins "Telestrategies Mediation Excellence Award" for second year
running in June.
"Intec has remained focused on its objective of improved operating performance
in a market that remains competitive, price-sensitive and capex-constrained,"
says Intec's Executive Chairman, Mike Frayne. "We have been able to improve
sales productivity, cut administrative costs, and increase development group
efficiency while sustaining overall revenues. Another strong quarter of cash
flow performance and improved earnings per share demonstrate the success of our
strategy in the current market."
"Intec continues to develop as a business, both in its operating performance and
in its internal processes. In the current market our focus is on the best
possible business performance today, combined with investment in key areas for
the future," adds Chief Executive, Kevin Adams. "We have won some very important
deals in the period, beating off strong competition and increasing our market
share."
For further information:
Kevin Adams, CEO
Intec Telecom Systems PLC
+44 (0) 1483 745800
kevin.adams@intec-telecom-systems.com
Andrew Rodaway
Intec Telecom Systems PLC
+44 (0) 7768 808082
andrew.rodaway@intec-telecom-systems.com
Cubitt Consulting
Fergus Wylie/Sarah Brydon
+44 (0) 20 7367 5100
fergus.wylie@cubitt.com
Chairman's and CEO's Statement
Overview
In the first nine months of its 2003 financial year Intec has worked hard to
deliver further improvements in operating performance against the backdrop of an
OSS market which remains flat, with continuing difficult and competitive market
conditions. Intec has improved its operating efficiency in a number of areas,
particularly the principal cost contributors of distribution, development and
administration, leading to a welcome increase in EBITDA margin and adjusted
earnings per share. Operating cash inflow remains positive, and we continue to
be successful in collecting cash from our growing customer base, producing a
further strengthening of our cash position.
A total of 40 new customer contracts have been signed in the nine months under
review, in a market where new licence business is very challenging. Adding 31
customers acquired with the Settler business brings the total to 71,
representing 476 installations in around 70 countries. Total revenues for the
period amounted to #33.2 million (9m 2002: #34.1 million), a strong result given
an adverse impact of approximately 6% due to the depreciation of the US Dollar.
Despite this small revenue drop, lower operating costs produced an increase in
EBITDA of 225% to #2,596,000 (9m 2002: #800,000). Operating cash inflow was #5.5
million. This is the sixth successive quarter of positive cashflow.
The external market environment remains very competitive, with carriers still
cautious about capital expenditure, although we believe that many customers are
now reviewing investment plans and initiating new OSS projects. Intec continues
to pursue high quality opportunities in all established markets, as well
actively selling into the most active developing sectors, such as China and
Eastern Europe.
In the period Intec gained certification to the TL9000 and ISO 9001 quality
management standards for its Atlanta-based mediation development processes.
Ongoing investment in both new and existing products to ensure they remain true
market leaders remains the cornerstone of our development process. Despite
substantial growth in our product portfolio, expenditure on development has
risen only moderately, as efficiencies generated through structural and
technical changes in Product Operations continue to show benefit.
During the period we concluded the acquisition of the 'Settler' business of
Ericsson, our major competitor in the interconnect billing market. With this
acquisition Intec has expanded its base of supported customers by 31 carriers,
and acquired a new business partner in Ericsson. Technology acquired from
Ericsson has also been used to launch new products and strengthen our product
roadmap in other areas.
Operational Review
During the period under review new customers were signed in Australia, China,
Colombia, the Czech Republic, Ireland, India, Italy, Jamaica, South Africa,
Venezuela, the UK and the US. Notable recent wins included InterconnecT at
Slovak Telecom, a large replacement mediation project for a major European PTT,
and InterconnecT and InterconnecT ITU at a substantial fixed-line provider in
Australia.
Our acquisition of the 'Settler' business from Ericsson, now rebranded as
InterconnecT Settler, has taken us into a number of new markets and brought
valuable extra technical capabilities. In addition to the core Settler product,
two additional systems, InterconnecT Automated Reconciliation and InterconnecT
Optimised Routing, both based on acquired Ericsson technology, have been
successfully launched and are operating in customer sites. This acquisition is
also contributing in a valuable way to next-generation products.
In June we announced the Intec Dynamic Charging Platform (DCP), a new solution
aimed at mobile operators bringing next-generation services to their customers.
Intec DCP, which is complementary to our existing mediation solution, will allow
operators to connect a wide range of complex network systems with the billing
and rating platforms that are essential to revenue generation from complex
services such as multimedia downloads, video messaging, online gaming and
entertainment. We believe Intec DCP will be of interest to any mobile operator
wanting to bill for complex, next-generation services, and we are already in
discussion with a number of customers about this innovative and important
product.
Our core products InterconnecT and Inter-mediatE are both the subject of major
development programs aimed at ensuring they retain their technical leadership in
the marketplace. Important new versions of both products are due in the next
year. The InterconnecT family is the clear market leader worldwide, with over
275 installations. Inter-mediatE, with the award of the 'Telestrategies
Mediation Award for Excellence 2003' in June for the second year running, based
on customer testimonials, continues to be the industry's most successful
convergent mediation solution. Over 130 carriers worldwide rely on
Inter-mediatE. InterconnecT CABS CG continues to build its market share with
over 115 US operators now relying on it for access charge billing. We have
consolidated our two US service bureaus into one, with all operations now
centred in Dallas, Texas.
Acquisition update
Intec continues its long-term policy of business expansion through both organic
development and carefully evaluated and managed acquisitions. Our December 2002
acquisition of Ericsson's 'Settler' business unit, a major competitor in the
interconnect billing market, has helped us acquire a number of new customers in
recent months as well as delivering satisfactory support revenues. With the
recent move of our acquired staff to new premises in Sweden, the integration is
virtually complete.
Many other opportunities exist in the OSS market. Intec actively seeks out and
reviews candidate companies and technologies. Our criteria for pursuing these
are unchanged - high-quality companies with complementary technologies or useful
market share that we believe will strengthen the Intec business and build
long-term shareholder value.
Corporate Developments
Intec reviews its operating requirements on a continual basis to ensure we have
the staff, offices, processes and resources required to meet our business
objectives. In the current OSS marketplace, where pricing pressure and strong
competition dominate the environment, Intec has been working to ensure it gains
productivity from its asset base. All expenditure is subject to critical review,
up to Board level if necessary, to eliminate any unproductive costs. We also
strive to deploy or re-deploy staff to maximum effectiveness, with loss of
experienced people only a very last resort. On a like for like basis, Intec
staff numbers at 30 June 2003 were 490 compared to 500 at 30 September 2002.
Including 31 new staff from the Settler acquisition, total staff numbers at 30
June 2003 were 521.
Financial Review
As previously reported Intec experiences a degree of unevenness in quarterly
revenues, primarily due to long sales cycles, uncertainty in the closure dates
of new contracts, and generally challenging market conditions. Total reported
revenues, amounting to #33.2 million, are #0.99 million or 3% lower than the
equivalent nine- month period in 2002. Both periods included a figure close to
#1 million for revenues from acquired businesses. We believe that the small
variation in overall revenue is consistent with normal quarterly variations,
particularly in view of the depreciation of the US Dollar.
Licence sales of #6.0 million (18% of turnover) are lower than the #10.2 million
reported in the first nine months of 2002. New licences continue to be the most
challenging area of the OSS business, although Intec has still been able to
secure high value contracts based on a strong business proposition, and we
continue to outperform major competitors in terms of new deal flow.
Recurring revenues, which consist of support and maintenance, volume upgrades,
bureau and support business, once again increased, at #17.4 million (53%) of
turnover, up 22% from #14.3 million (42%) for nine months of 2002. This includes
a contribution of #0.9 million from the Settler business acquisition. Customer
churn remains at exceptionally low levels, with the very small number of
contract terminations we experience almost exclusively within small start-up or
merged businesses.
Professional services income, including contracted implementation and
consultancy services, has also increased slightly to #9.7 million (29%) from
#9.6 million (28%) in 2002.
In terms of regional contribution North America and Asia Pacific have
experienced the most challenging trading conditions. Pricing pressure in the
low-cost markets of Asia, and reluctance amongst US carriers to embark on major
capex projects are the key factors. EMEA contributed 42% of turnover, North
America 35%, CALA 13%, and Asia-Pacific 10%.
Gross margin increased slightly to 68% (9 months 2002: 67%), largely reflecting
more efficient use of internal and external resources for implementations. An
18% decrease in distribution costs from #7.8 million to #6.5 million reflects,
in the main, reduced partner fee and commission payments due to reduced licence
sales.
Investment in our product portfolio remains strong at #6.9 million (9m 2002 #6.0
million). This increase reflects both the Settler development team (#0.8 million
expenditure in the period), our expanded product portfolio, and next-generation
product versions. Given these factors, overall efficiency of development effort
has increased considerably as a result of ongoing structural and technical
changes within Product Operations. For example, in a number of projects we are
sharing development effort across different products in areas such as user
interfaces.
Administrative costs decreased by 17% to #6.7 million (9m 2002: #8.1 million)
due to the depreciation of the US Dollar, continuing attention to cost control
across the business and the reassignment of senior executives to product
management. In addition, as mentioned in our 2002 annual report, items of
non-recurring expenditure such as legal costs for the resolved BT litigation
increased our costs throughout 2002.
Goodwill amortisation charges have increased from #4.7 million in 2002 to #5.3
million in the current period, reflecting additional goodwill amortisation from
the current year Settler acquisition (amortised over four years) and the former
ICL Sims/Prospero business acquired in the second quarter of 2002. No provision
for goodwill impairment has been considered necessary.
Operating loss of #4.1 million is a significant improvement over the #12.7
million operating loss reported in the prior period, reflecting both lower
overall costs in a number of areas and the absence of a goodwill impairment
charge. Excluding the goodwill impairment charges, operating loss was 24% lower
than the previous period.
We are pleased to report that cash and cash investments at 30 June 2003 have
increased to #14.0 million, after payment of #3.1 million (including acquisition
costs) for the Ericsson Settler business. Positive operating cash inflows of
#5.5 million reflect ongoing improvement in cash collections and the subsequent
effect of cost control measures taken throughout the group.
Intec's annualised debtor days including maintenance renewals are 100 days
compared to 105 days as at 30 September 2002 and 109 days reported at 30 June
2002. Successful cash collections have continued during the fourth quarter.
Collections to date are now in excess of the full year figure for 2002.
Outlook
In the nine months to 30 June 2003 Intec has focused on winning good quality new
business, sustaining and extending revenues from existing customers, and
managing costs proactively. Despite the highly competitive telecoms marketplace
Intec has been able to deliver operating results that are well within the range
of management expectations and normal quarterly fluctuations.
Intec continues to invest in creating an expanding, world-class product
portfolio through its worldwide development organisation. With several new
products recently launched, and updated versions of core products in the
pipeline, we believe we are very well positioned for future market improvements.
The final quarter of 2003 has begun well, with a number of important new deals
signed after the quarter end. Although we are still subject to many external
factors and new business remains to be closed, current visibility allows us to
remain cautiously confident of meeting full year expectations.
Mike Frayne, Executive Chairman
Kevin Adams, Chief Executive Officer
18 August 2003
FINANCIAL HIGHLIGHTS
9 months ended 30 June 2003
Unaudited Unaudited Audited
9 months ended 9 months ended Year ended
30 June 30 June 30 September
Note 2003 2002 2002
#000 #000 #000
Turnover 33,161 34,147 47,474
EBITDA before exceptional items (i) 2,596 800 3,739
Operating loss (4,115) (12,675) (13,325)
Basic loss per share (2.25)p (7.35)p (7.94)p
Adjusted earnings/(loss) per share (ii) 0.53p (0.66)p 0.46p
Notes to the financial highlights #000 #000 #000
(i) Operating loss (4,115) (12,675) (13,325)
Depreciation 1,431 1,273 1,745
Amortisation of goodwill and other
intangible assets 5,280 4,738 7,079
Impairment of goodwill - 7,464 7,464
Exceptional item (Poland debtor
provision) - - 776
EBITDA before exceptional items 2,596 800 3,739
(ii) Adjusted earnings/(loss) per share based
on following adjusted loss after tax
Loss after tax (4,281) (13,608) (14,782)
Amortisation of goodwill and other
intangible assets 5,280 4,738 7,079
Impairment of goodwill - 7,464 7,464
Write down of investments - 175 321
Exceptional item (Poland debtor
provision) - - 776
Adjusted earnings/(loss) after tax 999 (1,231) 858
KEY CUSTOMER DATA
30 June 30 September 30 June
2003 2002 2002
Number Number Number
Cumulative:
Contracted customer base 306 272 263
Contracted customers acquired 31 - -
Total contracted customer base 337 272 263
Contracted installations 427 383 353
Contracted installations acquired 49 - -
Total contracted installations 476 383 353
CONSOLIDATED PROFIT AND LOSS ACCOUNT
9 months ended 30 June 2003
Unaudited Unaudited Audited
9 months ended 9 months ended Year ended
30 June 30 June 30 September
2002
Note 2003 2002
#000 #000 #000
TURNOVER
Continuing operations 32,230 34,147 47,474
Acquisitions 5 931 - -
Total turnover 2 33,161 34,147 47,474
Cost of sales (10,556) (11,422) (15,430)
GROSS PROFIT 22,605 22,725 32,044
Distribution costs (6,462) (7,844) (9,945)
Administrative expenses:
Development expenditure (6,900) (6,043) (8,026)
Amortisation of goodwill and other intangible
assets (5,280) (4,738) (7,079)
Impairment of goodwill - (7,464) (7,464)
Exceptional item - - (776)
Other administrative expenses (8,078) (9,383) (12,079)
Total administrative expenses (20,258) (27,628) (35,424)
OPERATING LOSS
Continuing operations (3,654) (12,747) (13,325)
Acquisitions (461) - -
GROUP OPERATING LOSS (4,115) (12,747) (13,325)
Share of operating loss in associate - 72 -
Total operating loss (4,115) (12,675) (13,325)
Amounts written off investments - (175) (321)
Interest receivable and similar income 296 395 494
Interest payable and similar charges (51) (320) (331)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (3,870) (12,775) (13,483)
Tax charge on loss on ordinary activities 3 (411) (833) (1,299)
LOSS ON ORDINARY ACTIVITIES AFTER TAXATION AND
RETAINED FOR THE FINANCIAL PERIOD (4,281) (13,608) (14,782)
Loss per share - basic 4 (2.25)p (7.35)p (7.94)p
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
9 months ended 30 June 2003
Unaudited Unaudited Audited
9 months ended 9 months ended Year ended
30 June 30 June 30 September
2002
2003 2002
#000 #000 #000
Loss for the financial period (4,281) (13,608) (14,782)
Exchange translation differences arising on
Foreign currency net investments (206) (502) (557)
Total recognised gains and losses in the period (4,487) (14,110) (15,339)
CONSOLIDATED BALANCE SHEET
30 June 2003
Unaudited Unaudited Audited
30 June 30 June 30 September
2002
Note 2003 2002
#000 #000 #000
FIXED ASSETS
Intangible assets 61,430 65,127 63,422
Tangible assets 2,761 3,051 2,910
Investments 101 331 101
64,292 68,509 66,433
CURRENT ASSETS
Stocks 29 80 64
Debtors 6 16,912 18,232 17,965
Investments 5,412 643 5,151
Cash at bank and in hand 8,633 11,152 8,156
30,986 30,107 31,336
CREDITORS: falling due within one year 7 (6,981) (6,180) (5,796)
NET CURRENT ASSETS 24,005 23,927 25,540
TOTAL ASSETS LESS CURRENT LIABILITIES 88,297 92,436 91,973
Deferred income (6,523) (5,616) (5,766)
NET ASSETS 81,774 86,820 86,207
CAPITAL AND RESERVES
Called up share capital 8 1,906 1,881 1,903
Share premium account 8 238,703 238,058 238,652
Merger reserve 8 249 249 249
Foreign exchange reserve 8 (914) (653) (708)
Profit and loss account 8 (158,170) (152,715) (153,889)
EQUITY SHAREHOLDERS' FUNDS 81,774 86,820 86,207
RECONCILIATION OF MOVEMENT IN CONSOLIDATED SHAREHOLDERS' FUNDS
9 months ended 30 June 2003
Unaudited Unaudited Audited
30 June 30 June 30 September
2002
2003 2002
#000 #000 #000
Loss for the financial period (4,281) (13,608) (14,782)
Other recognised gains and losses relating to
the period (206) (502) (557)
Issue of share capital net of associated
expenses 54 2,737 3,353
Movement on contingent consideration on
acquisitions - (2,497) (2,497)
Decrease in shareholders' funds (4,433) (13,870) (14,483)
Opening shareholders' funds 86,207 100,690 100,690
Closing shareholders' funds 81,774 86,820 86,207
CONSOLIDATED CASH FLOW STATEMENT
9 months ended 30 June 2003
Unaudited Unaudited Audited
9 months ended 9 months ended Year ended
30 June 30 June 30 September
2002
Note 2003 2002
#000 #000 #000
Net cash inflow from operating activities (i) 5,512 845 2,770
Returns on investments and servicing of
finance
Interest received 291 374 494
Interest element of finance lease rental
payments - (4) (4)
Interest paid and similar items (46) (315) (327)
245 55 163
Taxation
Overseas taxation paid (452) (258) (378)
UK corporation taxation received/(paid) - 2 (10)
(452) (256) (388)
Capital investment
Payments to acquire tangible fixed assets (1,176) (1,314) (1,651)
Proceeds on disposal of fixed assets 2 49 59
(1,174) (1,265) (1,592)
Acquisitions
Investment in subsidiaries (see note 5) (3,400) (5,061) (5,222)
Net cash acquired with subsidiaries - 6
(3,400) (5,061) (5,216)
Cash inflow/(outflow) before management of
liquid resources and financing
731 (5,682) (4,263)
Use of liquid resources
(Increase)/decrease in cash investments/term
deposits (250) 2,248 (2,252)
Payments received from escrow - 53 52
Financing
Issue of ordinary share capital 54 - -
New bank loan 219 - -
Repayment of bank loan (219) - -
Capital element of finance lease rental
payments - (156) (188)
Increase/(decrease) in cash in the period (ii), (iii) 535 (3,537) (6,651)
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
9 months ended 30 June 2003
Unaudited Unaudited Audited
9 months ended 9 months ended Year ended
30 June 30 June 30 September
2002
2003 2002
#000 #000 #000
(i) Reconciliation of operating loss to net
cash inflow/(outflow) from operating
activities
Operating loss (4,115) (12,747) (13,325)
Depreciation 1,431 1,273 1,745
Amortisation of goodwill and other intangible
assets 5,280 4,738 7,079
Impairment of goodwill - 7,464 7,464
Loss/(profit) on disposal of fixed assets 36 (21) (25)
Decrease/(increase) in stocks 33 (55) (39)
Decrease/(increase) in debtors 590 (178) (172)
Increase/(decrease) in creditors 2,257 371 43
Net cash inflow from operating activities 5,512 845 2,770
(ii) Reconciliation of net cash flow to
movement in net funds
Increase/(decrease) in cash in the period 535 (3,537) (6,651)
Net cash outflow from decrease in debt and
lease financing - 156 188
Net cash (inflow)/outflow from (decrease)/
increase in liquid resources 250 (2,301) 2,200
Change in net funds resulting from cash flows 785 (5,682) (4,263)
Translation differences (47) (320) (195)
Movement in net funds in the period 738 (6,002) (4,458)
Net funds at 1 October 13,307 17,765 17,765
Net funds at 30 June / 30 September 14,045 11,763 13,307
(iii) Analysis of movement in net
funds
' Audited Unaudited
1 October Exchange 30 June
2002 Cash flow movement 2003
#000 #000 #000 #000
Cash in hand and at bank 8,156 535 (58) 8,633
Cash investments and term deposits 5,151 250 11 5,412
13,307 785 (47) 14,045
Notes to the unaudited interim financial information
9 months ended 30 June 2003
1. BASIS OF PREPARATION
The interim financial information has been prepared in accordance with
accounting policies set out in, and is consistent with, the Group's 2002
financial statements except for the taxation charge for the period, which is
based on the estimated charge for the year ending 30 September 2003.
The interim financial information is neither reviewed nor audited and does not
comprise statutory accounts for the purposes of Section 240 of the Companies Act
1985.
The abridged information for the year ended 30 September 2002 has been extracted
from the Group's statutory accounts for that period, which have been filed with
the Registrar of Companies following the 2002 Annual General Meeting. The
auditors' report on the statutory accounts of the Group for that period was
unqualified and did not contain a Statement under either Section 237(2) or
Section 237(3) of the Companies Act 1985.
The interim financial information was approved by the Board of Directors on 18
August 2003.
2. TURNOVER AND SEGMENTAL REPORTING
Turnover by origin Unaudited Unaudited
9 months ended 30 June 2003 9 months ended 30 June 2002
Inter- Inter-
Total segment External Total segment External
turnover turnover
turnover turnover turnover turnover
#000 #000 #000 #000 #000 #000
United Kingdom 16,795 (250) 16,545 15,701 (1,297) 14,404
Continental Europe 20 - 20 155 - 155
Asia-Pacific 308 - 308 1,439 - 1,439
North America & Canada 16,524 (1,256) 15,268 17,462 (231) 17,231
South America 1,020 - 1,020 918 - 918
34,667 (1,506) 33,161 35,675 (1,528) 34,147
Audited
Year ended 30 September 2002
Inter-
Total segment External
turnover turnover turnover
#000 #000 #000
United Kingdom 21,148 (1,509) 19,639
Continental Europe 166 - 166
Asia-Pacific 1,758 - 1,758
North America & Canada 25,566 (600) 24,966
South America 945 - 945
49,583 (2,109) 47,474
2. TURNOVER AND SEGMENTAL REPORTING (continued)
Turnover by destination Unaudited Unaudited Audited
9 months ended 9 months ended Year ended
30 June 30 June 30 September
2003 2002 2002
#000 #000 #000
United Kingdom 3,562 2,709 3,519
Continental Europe 7,023 7,428 9,753
Eastern Europe 2,174 1,051 1,235
Middle East 387 93 728
Africa 736 1,519 1,687
Asia-Pacific 3,354 4,883 5,521
North America & Canada 11,638 13,219 21,058
South America 4,287 3,245 3,973
33,161 34,147 47,474
Turnover by activity Unaudited Unaudited Audited
9 months ended 9 months ended Year ended
30 June 30 June 30 September
2003 2002 2002
#000 #000 #000
Licence sales 6,029 10,214 15,481
Professional services income:
Implementation, migrations, consulting and training 7,986 7,224 8,730
Hardware 84 165 576
Non-telecom custom network solutions 1,644 2,243 2,957
9,714 9,632 12,263
Recurring income:
ASP Service 2,509 2,012 2,761
Volume upgrade licences 1,555 1,226 1,928
Support and maintenance fees 13,354 11,063 15,041
17,418 14,301 19,730
33,161 34,147 47,474
2. TURNOVER AND SEGMENTAL REPORTING (continued)
Loss before taxation Unaudited 9 months ended 30 June 2003
Before After
amortisation of amortisation of
goodwill Amortisation of goodwill
goodwill
#000 #000 #000
United Kingdom 632 (1,885) (1,253)
Continental Europe 132 - 132
Asia-Pacific 49 - 49
North America & Canada 135 (3,395) (3,260)
South America 462 - 462
1,410 (5,280) (3,870)
The segmental analysis of loss before taxation for the nine months ended 30 June
2003 includes intercompany interest charged from the UK to North America &
Canada of #2,510,088 (30 June 2002 - #3,114,000).
Unaudited 9 months ended 30 June 2002
Before After
amortisation of amortisation of
goodwill, goodwill,
impairment and impairment and
exceptional Amortisation of Goodwill Exceptional exceptional
items goodwill impairment items items
#000 #000 #000 #000 #000
United Kingdom 524 (1,154) (1,684) (175) (2,489)
Continental Europe 470 (7) - - 463
Asia-Pacific (1) (330) (5,780) - (6,111)
North America & Canada (1,535) (3,247) - - (4,782)
South America 144 - - - 144
(398) (4,738) (7,464) (175) (12,775)
Audited Year ended 30 September 2002
Before After
amortisation of amortisation of
goodwill, goodwill,
impairment and impairment and
exceptional Amortisation of Goodwill Exceptional exceptional
items goodwill impairment items items
#000 #000 #000 #000 #000
United Kingdom 677 (2,200) (1,684) (1,097) (4,304)
Continental Europe 185 (74) - - 111
Asia-Pacific 187 (420) (5,780) - (6,013)
North America & Canada 948 (4,385) - - (3,437)
South America 160 - - - 160
2,157 (7,079) (7,464) (1,097) (13,483)
Exceptional items in the year ended 30 September 2002 comprise amounts written
off investments of #321,000 and a #776,000 provision against the debtor balance
due from the associate company in Poland.
2. TURNOVER AND SEGMENTAL REPORTING (continued)
Net assets/
(liabilities) by origin
Unaudited Unaudited Unaudited Unaudited Audited
30 June 30 June 30 June 30 June 30 September
2003 2003 2003 2002 2002
Excluding Including Including Including
unamortised Unamortised Unamortised Unamortised Unamortised
goodwill goodwill goodwill goodwill goodwill
#000 #000 #000 #000 #000
United Kingdom 12,352 3,867 16,219 18,967 17,125
Continental Europe (145) - (145) (107) (58)
Africa (227) - (227) - (464)
Asia-Pacific 28 - 28 885 494
North America & Canada 9,245 56,241 65,486 66,441 68,902
South America 413 - 413 634 208
21,666 60,108 81,774 86,820 86,207
3. TAX CHARGE ON LOSS ON ORDINARY ACTIVITIES
Unaudited Unaudited Audited
30 June 30 June 30 September
2003 2002 2002
#000 #000 #000
Current taxation:
UK corporation tax at 30% (2002: 30%) - - -
Overseas taxation 381 749 1,098
Prior year 30 76 273
Share of tax in associate - 8 -
Total current tax 411 833 1,371
Deferred taxation:
Origination and reversal of timing differences - - (72)
Tax on loss on ordinary activities 411 833 1,299
i) The major trading companies in the UK and the US have not
incurred corporate tax liabilities. However, the group has suffered corporate
taxation in a number of its overseas trading subsidiaries and branches amounting
to #0.2 million. The remainder of the tax charge is in respect of withholding
tax, which is deducted at source in certain jurisdictions and which the group
does not expect to recover, amounting to #0.2 million.
ii) The US operations have substantial ongoing tax benefits
arising from goodwill allowances that will continue to ameliorate tax charges
against profits in future periods. In addition, there are significant losses
brought forward in the US.
4. (LOSS)/EARNINGS PER ORDINARY SHARE
Unaudited Unaudited Audited
9 months ended 9 months ended Year ended
30 June 30 June 30 September
2003 2002 2002
#000 #000 #000
Basic loss (4,281) (13,608) (14,782)
Amortisation of goodwill and intangible assets 5,280 4,738 7,079
Impairment of goodwill - 7,464 7,464
Amounts written off investments - 175 321
Exceptional item (Poland debtor provision) - - 776
Adjusted earnings/(loss) 999 (1,231) 858
Number Number Number
Weighted average number of shares 190,522,730 185,241,561 186,219,551
Pence Pence Pence
Basic loss per ordinary share (2.25) (7.35) (7.94)
Amortisation of goodwill and other intangible assets 2.78 2.56 3.80
Impairment of goodwill - 4.03 4.01
Amounts written off investments - 0.10 0.17
Exceptional item (Poland debtor provision) - - 0.42
Adjusted earnings/(loss) per ordinary share 0.53 (0.66) 0.46
Diluted earnings/(loss) per share is not presented in respect of outstanding
share options since none of the options are dilutive.
5. ACQUISITIONS
a) Current period acquisitions
On 18 December 2002, the group acquired Ericsson AB's 'Settler' interconnect
billing product unit, including the Settler development team and worldwide
rights to develop and market the Settler product range. The total
consideration, settled in cash, amounted to US$5.1 million (#3.0 million plus
acquisition costs of #0.1 million) as disclosed below. Goodwill arising on
acquisition has been capitalised and is being amortised over four years from the
date of acquisition. Goodwill charged in the period amounts to #440,000.
Turnover from acquisitions of #931,000 is for the period from 18 December to 30
June 2003.
Provisional
Net liabilities at date of acquisition and provisional fair value
fair value
#'000
Creditors (176)
Goodwill arising on acquisition 3,299
3,123
Consideration paid in cash 2,990
Acquisition costs 133
3,123
In addition to the above, a share option was granted to the advisers to the
acquisition. This option vested on successful closure of the acquisition and
was exercisable immediately. 293,121 ordinary shares were issued at 20.2 pence
per share.
b) Prior year acquisitions
Deferred consideration of #277,000 was paid in respect of the operational
support systems business acquired from ICL, a Fujitsu company.
c) Reconciliation to cash flow statement
#000
Consideration for Settler business 2,990
Acquisition costs 133
Deferred consideration payments on prior year acquisition 277
3,400
6. DEBTORS
Unaudited Unaudited Audited
30 June 30 June 30 September
2003 2002 2002
#000 #000 #000
Trade debtors 12,807 13,467 13,676
Corporation tax recoverable 196 196 196
Deferred tax 96 - 72
Withholding tax recoverable 19 - -
Other debtors 87 746 301
Accrued income 2,582 2,334 2,571
Prepayments due within one year 1,125 1,489 1,149
16,912 18,232 17,965
7. CREDITORS
Unaudited Unaudited Audited
30 June 30 June 30
September
2003 2002
2002
#000 #000 #000
Falling due within one year:
Obligations under finance leases - 32 -
Trade creditors 1,438 1,852 1,767
Corporation tax 454 454 454
Overseas tax 308 76 516
Other creditors including taxation and social security 1,275 779 686
Accruals 3,080 2,169 1,670
Deferred/contingent consideration 426 818 703
6,981 6,180 5,796
8. STATEMENT OF MOVEMENTS ON SHARE CAPITAL AND RESERVES
Called Share Foreign Profit
premium exchange and loss
up share account Merger reserve account
reserve
capital Total
#000 #000 #000 #000 #000 #000
At 1 October 2002 1,903 238,652 249 (708) (153,889) 86,207
Issue of ordinary shares net of
expenses 3 51 - - - 54
Loss for the period - - - - (4,281) (4,281)
Foreign exchange translation - - - (206) - (206)
At 30 June 2003 1,906 238,703 249 (914) (158,170) 81,774
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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