RNS Number:2286O
ID Data PLC
01 August 2003
1 August 2003
ID Data plc
Preliminary Results
for the year ended 31 March 2003
ID Data plc ('ID Data' or 'the Company'), a leading supplier of secure
transaction systems and smart card services to the international telephony,
banking, retail and secure access sectors, today reports Preliminary Results for
the year ended 31 March 2003.
Highlights
* Turnover 10 per cent higher at #19.7 million against #17.9 million.
* Pre-tax loss almost halved to #3.4 million from #6.4 million.
* Operating losses reduced from #5.8 million to #1.3 million
* Manufacturing cost base reduced after reorganisation of production facilities. Further cost reductions
of some #2m expected in the current year.
* New contract to supply cards for the launch of Nectar, the UK's largest retail loyalty programme.
* New contract for the Post Office Counters Account to supply chip cards for the organisation's
customers in the run-up to state benefits being paid into bank accounts.
* Sale of first loyalty card solution to Statoil in Poland.
* ChipPort business being developed to offer ID Data's licensed technology to card manufacturers
globally.
Commenting on the Results, Peter Cox, Chief Executive of ID Data plc, said:
"The business will continue to improve its cost base, but the major emphasis
will be on the exploitation of our products and intellectual property, whilst
building our market share."
Set out below are the preliminary financial statements for the period ended 31
March 2003. The full audited annual report and accounts for the period ended 31
March 2003 are available now via the "Investor Relations" section of the
Company's website (www.id-data.co.uk) of which copies are being despatched to
Shareholders in due course. Further copies are available, free of charge, from
the Company's registered office Wansell Road, Weldon North, Corby,
Northamptonshire, NN17 5LX.
For further information, please contact:
ID Data plc
Peter Cox, Chief Executive Tel: +44 (0) 1536 207 000
Email: peter.cox@id-data.co.uk
Media enquiries:
Bankside
Peter Curtain / Heather Salmond Tel: +44 (0) 20 7444 4140
Email: heather.salmond@bankside.com
Statement by Mike Blackburn, Chairman
I am pleased to report the Group's result for the year ended 31 March 2003.
Turnover improved to #19.7 million (2002: #17.9 million) whilst the loss before
tax was reduced to #3.4 million (2002: #6.4 million). Shareholders' funds stood
at #2.9 million (2002: #1.1 million).
The markets in which the Group operates have continued to be extremely
challenging. Falling revenues, accompanied by trading losses, are being
experienced by the industry leaders as customers hold back on investment. The
Group's performance in this environment is all the more creditable. In his
Review, the Chief Executive records the successes we have achieved in increasing
revenues and the actions taken to cut the cost base. The Executive team is
confident of identifying further opportunities to increase revenues and minimise
costs.
It was heartening that shareholders continued to show faith in the business by
subscribing last June to #3.8 million of further equity. Subsequently, a share
transfer agreement was entered into with New Opportunities Investment Trust plc
("NOIT") under which 36,363,636 new shares in ID Data plc were exchanged for
2,000,000 new shares in NOIT which can be traded on the London Stock Exchange.
In addition, 400,000 warrants in NOIT were also received. In a current
fund-raising exercise, additional finance is intended to be raised primarily in
the form of a convertible secured loan stock which carries a 7% coupon. The
stock may be converted into ordinary shares in the Company at 5.5p per ordinary
share from 4 September 2003.
Martin Coles was promoted to Finance Director and a member of the Board
following the resignation of Andrew Mintern in November 2002. Michael Stewart,
Managing Director of ID Data Systems Limited, was also appointed to the Board
during the year. Each is making a major contribution to the Group's progress.
Richard Allnutt, the other non-executive director, resigned due to the pressure
of his executive role at Fujitsu Services. The Board wishes to record its thanks
for his substantial contribution.
Our staff has endured a difficult year with considerable fortitude. The
decommissioning and subsequent closure of our site in Coventry created extra
pressure throughout the business but the decision was the appropriate one for
the Group to move towards profitability. The whole team is to be commended for
its efforts and has the Board's sincere gratitude.
The outlook for the business remains challenging, as it did twelve months ago.
The economies in the developed and developing worlds are experiencing varying
degrees of recession or low growth. Nevertheless, the Group's traditional
strengths make it well-placed to take advantage of any upturn to come as it
continues to focus on sales growth, margin improvements and further cost
reductions.
Mike Blackburn
Chairman
Chief Executive's Review, by Peter Cox
The last year has been encouraging, with ID Data reporting a 10% increase in
sales and sharply reduced losses. This was achieved against a general industry
backdrop of poor performance, with major competitors seeing reduced sales and
significant falls in profitability.
In last year's annual report we highlighted several key objectives for the year
to 31 March 2003, namely:
* to improve our efficiency
* to simplify our delivery platform
* to target costs
* to gain increased labour utilisation
Progress has been achieved in meeting these objectives with an improvement in
both sales and a 48% fall in the net loss. EBITDA was #0.8 million for the year
ended 31 March 2003 as against a negative EBITDA of #1.9 million for the
previous year.
Our move towards profitability is based upon our focusing on three key areas -
sales, cost reductions and a move to greater licensing revenues.
Sales Growth
As a business we continue to target the converging markets of Retail, Banking
and Telephony. During the year, we have gained a number of significant and
valuable new contracts. The largest single contract was to supply and
personalise all the NECTAR loyalty cards for the launch of the UK's largest
retail loyalty programme.
This contract is typical of the business in which ID Data thrives, and will add
to the future revenues of the business as the Nectar scheme develops and brings
on new partners and cardholders, adding to our future growth.
In banking we gained the Post Office Counters Account contract. This
multi-million pound deal covered the manufacture, personalisation and delivery
of chip cards for the new bank's customers. The programme is expected to yield
some 12 million cards by the time all state benefits are paid into bank
accounts.
The sale of our first loyalty solution in Poland, to Statoil, was further proof
that the products and services we deliver in the UK can be successfully
implemented around the world, thus offering future major business opportunities.
The growth of ID Data depends on its ability not only to secure new business,
but also to retain the loyalty of its existing clients. Our success in doing so
during the year is evidenced by the renewal of contracts with Tesco and the
Automobile Association, both significant contributors to our base revenues.
We also have been developing a channel marketing opportunity through our
ChipPort business, which offers card manufacturers around the world our licensed
technology, providing them with much more efficient and economic access to chip
cards.
Retail
The current economic climate has re-emphasised the need for retailers to focus
even more on retaining their valuable customers. This is where our loyalty card
solutions are key, as their use allows retailers to identify and retain the most
important 20% of their clients that typically drive their businesses.
ID Data's retail card products are now carried by the majority of the UK's
residents over the age of 18, and the chances are that at least one of our cards
will be found in most people's wallets or purses.
We expect continued growth in the demand for our products from the retail
market, and one of the most exciting moves will be the introduction of plastic
gift cards, as a more secure and manageable way of providing retail gift
vouchers both online and through retail outlets.
Banking
ID Data is a fully licensed VISA and MasterCard supplier and, through our TTi
joint venture with our partners Toshiba and Toppan of Japan, we can provide the
total needs of the Credit and Debit card markets, internationally.
We have clearly been disappointed that the Banks have been slower to migrate to
smart chips than originally expected, but the forecast remains for nearly one
billion Bank cards to be smart enabled by 2005.
ID Data's position in Banking is not to be seen as the commodity card supplier,
but the provider of unique solutions where the client gains market
differentiation and ID Data gains an acceptable margin contribution.
A new business area has been the supply of mainframe encryption software that
allows banks to generate the crypto keys for the latest secure chip cards. Our
first sale was to Abbey National in 2002.
The Banking market is pivotal to the future development of our business and our
past track record of quality and delivery should enhance our industry position.
We have delivered in excess of 10 million chip cards to the UK banks over the
last three years and we are now positioned to exploit this know-how and
globalise the business opportunities through our ChipPort channel.
Telephony
Over the last year, we have strengthened our range of telecom solutions with a
comprehensive delivery platform, covering the pre-paid and account holder needs
in the GSM and fixed-line sectors.
ID Data is now changing its global supply agreement with Marconi covering the
supply of fixed line pre-paid products, thus allowing us to sell directly into
what remains a major market sector.
Our first major success was an order for 10 million memory cards for Omantel,
won against global competition in late 2002.
In the GSM sector, our sales efforts have been frustrated by the significant
reduction in SIM prices and our conscious decision not to chase low-margin
business. ID Data's strategy for GSM is to promote its high-level solutions and
the Origin-J technology via licensing agreements and use of the ChipPort sales
channel.
Cost Reduction
As previously advised, your Company has made significant progress in achieving
the objective of reducing our manufacturing cost base, whilst retaining our
capabilities. This has resulted in a complete reorganisation of our production
facilities and staffing with the outcome being the closure of the Coventry
facility early in the current financial year.
We have also continued to evaluate our core business needs and to outsource
non-profitable functions. All these initiatives will provide ongoing cost
reductions of approximately #2 million in a full year. The impact will be felt
in the current year.
I wish to thank our management and employees for their commitment during this
difficult and demanding period of change.
Looking forward, ID Data will continue to push for margin enhancement in the
currently challenging economic climate, as we believe only those with efficient
businesses will be able to survive and grow.
The move to greater licensing revenues
Licensing is potentially our most exciting new revenue generating opportunity
where, through the acquisition, development and exploitation of leading edge
technical software, we will license products to global industry players directly
or through ChipPort.
We see an exciting future in this business model, but are experiencing delays
and frustration due to the current economic climate, where there is resistance
on behalf of customers to those levels of investment needed ahead of their
committed sales.
Our current licensing efforts are focused on Origin-J and the knowledge we have
in the banking and retail markets. This approach should be a major future
income contributor as we have already expensed a significant proportion of our
development and sales costs. However, the main issues are timing and clients'
willingness to invest and adopt our solutions in the short term.
In summary
In the last year, your Company has demonstrated good progress in a tough market.
Management has been focused on improved returns and margin enhancement. It is
expected that many of these initiatives will have positive ongoing benefits,
contributing to our goal of running a strongly profitable business over the
long-term.
The Future
The business will continue to improve its cost base, but the major emphasis will
be on the exploitation of our products and intellectual property, whilst
building our market share.
Peter Cox
Chief Executive
Consolidated Profit and Loss Account
For the year ended 31 March 2003
Notes 2003 Restated 2002
# #
GROUP AND SHARE OF JOINT VENTURE TURNOVER 19,751,259 18,039,524
Less share of joint venture turnover (99,794) (182,634)
GROUP TURNOVER 19,651,465 17,856,890
Cost of sales
Normal (17,200,024) (19,217,147)
Exceptional impairment provision 3 - (1,500,000)
Total cost of sales (17,200,024) (20,717,147)
GROSS PROFIT / (LOSS) 2,451,441 (2,860,257)
Sales and distribution costs (1,556,162) (1,126,812)
Administration expenses (2,105,811) (1,748,463)
OPERATING LOSS ON ORDINARY ACTIVITIES (1,210,532) (5,735,532)
Group share of operating loss in joint venture (49,065) (30,460)
GROUP OPERATING LOSS ON ORDINARY ACTIVITIES (1,259,597) (5,765,992)
Amounts provided against quoted investments (340,000) -
Exceptional item 3 (1,239,535) (150,000)
LOSS BEFORE INTEREST AND TAXATION (2,839,132) (5,915,992)
Interest receivable and similar items 6,582 77,323
Interest payable and similar charges (537,790) (594,857)
Group share of interest (payable)/receivable in joint venture (7,245) 124
LOSS BEFORE TAXATION (3,377,585) (6,433,402)
TAXATION - -
RETAINED LOSS FOR THE YEAR (3,377,585) (6,433,402)
Loss per ordinary share (in pence):
Basic loss per share 5 (2.2)p (9.4)p
Loss per share before exceptional costs 5 (1.4)p (7.0)p
Consolidated Balance Sheet
As at 31 March 2003
Notes 2003 2002
# #
FIXED ASSETS
Intangible (15,219) (30,441)
Tangible 3,710,345 5,384,616
Investments 7,240 7,396
Investment in joint venture:
Share of gross assets 202,541 433,248
Share of gross liabilities (351,701) (526,098)
Share of net liabilities of joint venture (149,160) (92,850)
3,553,206 5,268,721
CURRENT ASSETS
Stocks 1,211,595 1,848,405
Debtors 3,544,270 4,668,268
Investments 1,000,000 -
Cash at bank and in hand 262,018 219,187
6,017,883 6,735,860
CREDITORS:
Amounts falling due within one year (5,696,815) (9,134,768)
NET CURRENT ASSETS / (LIABILITIES) 321,068 (2,398,908)
TOTAL ASSETS LESS CURRENT LIABILITIES 3,874,274 2,869,813
CREDITORS:
Amounts falling due after more than one year (462,095) (1,788,732)
PROVISIONS FOR LIABILITIES AND CHARGES (539,748) -
NET ASSETS 2,872,431 1,081,081
CAPITAL AND RESERVES
Called up share capital 1,929,467 680,701
Share premium account 16,653,852 12,733,683
Profit and loss account (15,710,888) (12,333,303)
EQUITY SHAREHOLDERS' FUNDS 7 2,872,431 1,081,081
Consolidated Cash Flow
For the year ended 31 March 2003
Notes 2003 2002
# #
RECONCILIATION OF LOSS BEFORE INTEREST
AND TAXATION TO OPERATING CASH OUTFLOW
Operating loss before interest and taxation (1,259,597) (5,765,992)
Amortisation of negative goodwill (15,222) (15,228)
Exceptional impairment provision against fixed assets - 1,500,000
Depreciation of tangible fixed assets 1,885,895 2,383,341
Decrease in debtors 1,123,999 115,656
Decrease/ (increase) in stocks 636,810 (642,117)
(Decrease) / Increase in creditors (3,024,362) 1,030,216
Increase/(decrease) in provisions for liabilities and - (330,000)
charges
Amounts written off investments 56,466 30,460
Cashflow arising from exceptional restructuring costs (513,187) -
Loss/(profit) on disposal of fixed assets 83,769 (10,684)
Net cash outflow from operating activities (1,025,429) (1,704,348)
Returns on investments and servicing of finance (538,454) (517,411)
Capital expenditure (481,993) (1,220,799)
Investment in unquoted company - (150,000)
Net cash outflow before financing (2,045,876) (3,592,558)
Financing 2,168,376 (2,689,704)
Increase/(decrease) in net cash in the year 122,500 (6,282,262)
RECONCILIATION OF NET CASH FLOW
TO MOVEMENT IN NET DEBT 6
Increase/ (decrease) in net cash in the year 122,500 (6,282,262)
Repayment of lease finance 1,531,931 1,768,547
Decrease in trade and other debt 128,628 926,102
Change in net debt arising from cash flows 1,783,059 (3,587,613)
New finance leases - (719,594)
Movement in net debt in the year 1,783,059 (4,307,207)
Net debt beginning of year (4,869,789) (562,582)
Net debt end of year (3,086,730) (4,869,789)
Notes
1. PRELIMINARY STATEMENT
This preliminary statement, which has been agreed with the auditors, was approved by the Board on 31
July 2003. It is not the company's statutory accounts, which will be sent to shareholders shortly.
The statutory accounts for the year ended 31 March 2003 have received an unqualified Auditors' Report
which refers to the going concern matter described in note 2 below.
The statutory accounts for the year to 31 March 2002 received an unqualified Auditors' Report and
have been filed with the Registrar of Companies.
2. GOING CONCERN
During the year the group incurred losses of #3,377,585 and at the year end requires further funding
to meet its working capital requirements. The group is currently engaged in both a cost reduction
programme, incorporating site rationalisation, and further fundraising by a proposed issue of
convertible secured loan stock. Further details can be found in the Chairman's Statement. The
implementation of these measures is still subject to a number of uncertainties that are not within
the control of the group. In particular, the raising of sufficient additional funds primarily by the
issue of convertible secured loan stock has yet to be completed. However, the directors believe that
these measures will be successful and will enable the company and the group to continue as a going
concern for the foreseeable future and therefore have prepared the financial statements on this
basis.
3. EXCEPTIONAL ITEMS
The exceptional item incurred in the year to 31 March 2003 of #1,239,535 (2002:#150,000) relates to
costs and provisions for the reorganisation closure costs of one of the company's manufacturing sites
and the consequential fundamental reorganisation of the rest of the business. The amount incurred in
the year is #699,787 and the balance remaining of #539,748 has been provided for and is shown as a
provision for liabilities and charges in the balance sheet at 31 March 2003 (2002: nil).
The exceptional item incurred in the year to 31 March 2002 of #150,000 relates to the write-off of an
investment in an unquoted company.
The exceptional impairment provision in the year to 31 March 2002 relates to accelerated depreciation
on plant and machinery which was derived from the discounted cash flow projections of groups of
assets using a nominal discount rate of 20% and a growth rate of 5%.
4. CLASSIFICATION OF COSTS
For comparative purposes, a reclassification of costs has been made in respect of operating costs
previously reported for the 12 month period to 31 March 2002 in order to represent more fairly the
structure of the Company.
5. LOSS PER SHARE
Basic loss per share is calculated by dividing the Group's loss after taxation of #3,377,585 (2002:
#6,433,402) by the weighted average number of shares in issue during the year of 151,871,330 (2002:
68,066,676).
Loss per share before exceptionals is calculated by dividing the Group's loss after taxation of
#2,138,050 (2002: #4,783,402) by the weighted average number of shares in issue during the year of
151,871,330 (2002: 68,066,676).
No diluted earnings per share is presented as the effect of the exercise of share options would be to
decrease the loss per share.
6. ANALYSIS OF CHANGES IN NET DEBT
March Cash March
2002 Flows 2003
# # #
Cash at bank and in hand 219,187 42,831 262,018
Overdrafts (106,765) 79,669 (27,096)
112,422 122,500 234,922
Trade debt facility (1,527,639) 128,628 (1,399,011)
Finance leases (3,454,572) 1,531,931 (1,922,641)
Total (4,869,789) 1,783,059 (3,086,730)
7. SHAREHOLDERS' FUNDS
2003 2002
# #
Beginning of year 1,081,081 7,509,538
Retained loss for the year (3,377,585) (6,433,402)
New shares issued 5,168,935 4,945
End of year 2,872,431 1,081,081
8 ANNUAL GENERAL MEETING
The Annual General Meeting will be held on 4 September, 2003 at 9am at Simmons & Simmons, City Point,
One Ropemaker Street, London EC2Y 9SS.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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