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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Intechnology | LSE:ITO | London | Ordinary Share | GB0001388932 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 24.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
RNS Number:0444X InTechnology PLC 11 June 2002 InTechnology plc Preliminary results for the year ended 31 March 2002 11 June 2002 InTechnology plc ("InTechnology", "the Company" or "the Group"), the UK's leading provider of data storage solutions, announces preliminary results for the year ended 31 March 2002. Financial highlights • Turnover £158.1 million • Gross profit £22.3 million • Earnings before interest, tax, amortisation and impairment was £0.8 million loss, generated by SSS trading profit of £8.8 million • Investment in staff and resources strengthens InTechnology's position for the future • After its first full year of trading, the Online Data Services division now has £22.0 million of contracts, generating £7.0 million of recurring revenues per annum • Under FRS 11, a charge of £73.5 million relating to impairment of goodwill arising on prior year acquisitions has been accounted for. Going forward, this translates to a 50% reduction in annual amortisation charges to around £4 million • Cash reserves remain strong at £23.3 million. Net cash inflow from operating activities was £4.0 million Operational highlights • Sales, technical and support services strengthened to allow InTechnology to gain full benefit from its early advantage in this growing marketplace • VBAK sales to a number of corporates including Heritage Lottery Fund, Teather & Greenwood Holdings plc, Porsche Cars Great Britain Limited, IMG (UK) Limited, Railtrack plc, ArztPartner AG and Antenne Bayern • Contracts signed for VBAK Plus, the online storage service InTechnology launched in late autumn to accommodate businesses with larger data volumes, include Newsplayer Group plc and Metromedia Fiber Network UK Limited • First contracts signed in Germany • Formally recognised as IBM's leading storage partner • New partnership signed with Hewlett Packard • Exclusive partnership agreement signed with Sun Microsystems • DSL based service developed for the small to medium enterprise market Recent events • Pilot scheme with the DTI converted into a contract for VBAK systems in 5 DTI locations in London and providing an entry into the public sector • New CEO, Charles Cameron, appointed to take over the day-to-day running of the Group and strategy implementation (effective 1st July 2002) • Peter Wilkinson becomes Executive Chairman to focus on strategic and technological development. Lord Parkinson becomes non-Executive President, remaining Chair of the Board and Audit Committee. (Both effective 1st July 2002). Commenting on the results, Peter Wilkinson, CEO of InTechnology said: "I am very positive about the results having come in on forecast with a small loss before exceptionals. Our Storage Solutions Services division continues to deliver strong profits and our Online Data Services division is now a well-established and proven business having secured £22 million of contracts. This division will pass through breakeven towards the end of the year and the future looks very bright indeed." For further Information: InTechnology plc Peter Wilkinson / Steve Pearce 020 7786 3400 Beattie Financial Ann Marie Wilkinson / Richard Sunderland 020 7398 3300 Chairman's Statement I am pleased to report that in the past year, InTechnology plc has achieved creditable sales in difficult market conditions, including meeting our revenue targets in our flagship Online Data Services ('ODS') division. Following further investment in technical infrastructure, the Group is now in a position to exploit the burgeoning European market for online data services and data storage solutions. We obtained our first ODS customers in Germany during the year and are optimistic about the growth prospects of the business. Turnover in the year ended 31 March 2002 was £158.1 million, compared with £122.4 million in the period last year, giving a gross profit of £22.3 million (2001: £15.5 million). Investment in new technical staff and resources increased salaries and other costs to £19.5 million, which reduced EBITDA to £2.8 million (2001: £5.3 million). Earnings before interest, tax, goodwill amortisation and impairment ('EBITA') were reduced to £0.8 million loss (2001: £3.8 million profit). The Storage Solutions and Services ('SSS') division increased EBITA to £8.8 million, (2001: £7.0 million), increasing both gross and net margins, whilst the ODS division had £9.6 million loss (2001: £3.1 million loss). As with many technology companies, reported profits have been impacted by the write-down of goodwill associated with acquisitions in accordance with FRS 11. As a result, there is an exceptional impairment charge of £73.5 million which together with goodwill amortisation and writing off an investment in a small loss making associated undertaking gave a net loss before tax of £82.5 million (2001: £1.4 million), with cash reserves at £23.3 million (2001: £26.8 million). Net cash inflow from operating activities was £4.0 million (2001: £2.9 million), of which SSS generated £8.4 million (2001: £1.7 million). The Board's strategy is firstly to leverage the customer base and resources of the established SSS division and to develop online data services yielding high margin recurring revenues. Secondly, through strategic partnerships and a dedicated sales force, to broaden our customer base and to move into new areas of customer opportunity. We are succeeding in both these objectives. Despite difficult trading conditions, the SSS division has made steady progress through the continued support of our strong network of resellers. Our partnerships with major hardware vendors, IBM, Compaq and Sun, and with leading software vendors, mean that we are supplying best of breed components for all our clients' solutions. The new partnership with Hewlett Packard has benefits for high-end solutions business through their XP technology. The ODS division has achieved significant growth and now has signed £22.0 million of contracts. We have won new contracts for both VBAK and VBAK Plus, our automated, secure back up and archiving services with a number of large corporates including Heritage Lottery Fund, Newsplayer Group plc, Teather & Greenwood Holdings plc, Porsche Cars Great Britain Limited, IMG (UK) Limited and Railtrack plc. Expansion in this area of the market is driven partly by the new urgency for disaster recovery provision, of which secure data backup is a key part, and also by increasing corporate requirements, under pressure from shareholders, insurers and industry bodies, to provide for the security and integrity of business data. Early sales of our new VBAK Plus service, which backs-up higher data volumes of between 1 and 10 terabytes, have been encouraging. In addition, we have seen growing numbers of contracts for the Advanced Infrastructure Provision service, which caters for clients seeking to outsource their infrastructure to our data centres. Our German subsidiary, InTechnology AG, based in Munich is now well established and has made significant early progress with the VBAK service. A number of contracts have been signed and we have high expectations for this operation and for wider penetration of the European market in the future. We have also grown revenues from consultancy and training services. These have been generated by InTechnology's highly skilled technical storage specialists, whose expertise and authority underpins the work of both the SSS and ODS divisions of the Group. Data storage expertise is highly valued in the IT industry and this value added service is one of InTechnology's major commercial strengths. I would also like to welcome Charles Cameron to the Board. As detailed in a separate announcement this morning, he joins InTechnology as CEO where he will be responsible for the day-to-day running of the Group and strategy implementation. This will enable Peter Wilkinson, who becomes Executive Chairman, to focus on InTechnology's technological and strategic development. In turn, I will become non-Executive President of the Group and will continue to chair the Board of Directors. All appointments become effective on 1st July 2002. I am constantly impressed by the skills, energy and enthusiasm of all the InTechnology staff and, on behalf of the Board, would like to thank them for their commitment to the Group. The Group also owes a great deal to the vision and entrepreneurial skills of Peter Wilkinson, our CEO, and to his dedicated management team. I look forward to the year ahead and to continuing the progress of the past year. The Rt. Hon. Lord Parkinson Non-Executive Chairman 10 June 2002 Chief Executive's Report I am delighted with the Group's performance over the last year and in particular the growth achieved by our Online Data Services division. This was achieved in a difficult and unpredictable year for our markets and sets a precedent for the future. The past year has brought into sharp focus the rapidly growing requirement in the corporate world for secure data backup, data recovery provision and data storage - areas in which InTechnology is an unrivalled technical authority and leading player in the UK. Our energies throughout the year have been focused on aligning our sales, technical and support services with the needs of this rapidly growing marketplace to ensure that we derive full benefit from our early advantage. Storage Solutions and Services ('SSS') During the year, InTechnology achieved sales in SSS of £154.0 million (2001: £120.3 million), including software sales of £13.4 million (2001: £6.7 million) and consultancy and services sales of £6.3 million (2001: £3.3 million). The supply of data storage solutions to end-user customers through InTechnology's channel partners has proved to be a robust business that has performed well, despite the difficult market conditions of the past year. Most enterprises that we have spoken to are expecting their storage capacity to double every year and I therefore anticipate a continued trend of strong growth in sales by this division. We were pleased to see InTechnology's authority in this market place being recognised this year by a number of endorsements from our key vendor partners. We were formally recognised as the leading IBM Storage Partner by being awarded the "EMEA Storage Partner of the Year" and "Northern Region Value-Added Distributor of the Year". InTechnology was also selected to be IBM's only Total Storage Training Partner in the UK. Partnerships with Compaq and Hewlett Packard strengthened throughout the year and we are extremely excited about the merger between these parties, which will considerably increase our potential market size. We anticipate considerable further development in this area. Sun Microsystems, an existing vendor partner, announced an exclusive distribution agreement with InTechnology and VERITAS software. The storage market continues to increase in sophistication with market acceptance of complex technologies such as SAN (Storage Area Network), NAS (Network Attached Storage) and storage management tools. The levels of expertise we have place us in a unique position in this market. Software We have now set up a specialist team to handle this growing and profitable area of business and new partnerships were developed with software providers including Computer Associates, CNT, Datacore, Emulex and Falconstor. Consultancy and training Throughout the year, we have invested in and expanded our team of highly specialised technical consultants, in order to generate a revenue stream from services to clients, as well as supporting data storage solutions. E-commerce We have begun to utilise our website as a further means of business generation. It is being developed as a powerful marketing and communications tool and in the past year we have introduced a new e-commerce facility that encourages reseller partners to purchase rapidly and easily online. Online Data Services ('ODS') We are extremely pleased with the performance of our ODS division, which, after its first full trading year now has signed £22.0 million of contracts, generating £7.0 million of recurring revenues per annum. Our aim now is to maximize these recurring revenues by continuing to grow our client base in this market. As such, major investments have been made in technical staff and infrastructure to expand this division and facilitate business growth. Additional data centre space has been acquired in London and re-fitted to the highest security specification for clients to store data offsite. Operations are available 24 hours a day, 365 days a year at both the Harrogate and London data centres. VBAK Over the last year, clients from both the public and private sector have signed contracts for VBAK, InTechnology's service which automatically backs-up, encrypts and securely transmits data via a private leased line to our data centre. As the problems associated with traditional manual back-up become increasingly apparent, there is growing acceptance that VBAK is a faster, superior and more cost effective service and demand continues to increase across a wide variety of sectors and industries. VBAK sales are also being assisted by the implementation of disaster recovery strategies, as well as increasing pressures for data protection. VBAK Plus In order to accommodate larger data volumes, VBAK Plus was launched in late autumn. It provides a data backup service for enterprises with 1 - 10 terabytes of data and has achieved contracts with Newsplayer Group plc and Metromedia Fiber Network UK Limited. It offers higher recurring revenues in return for our investment in high bandwidth communications and data centre space. Advanced Infrastructure Provision ('AIP') We are experiencing growth in this area of business from clients seeking to outsource their infrastructure to our data centres. InTechnology is Europe's first advanced infrastructure provider, offering its reseller partners a managed infrastructure of networked data centres to allow them to deliver value-added services to their customers. For example, Hamilton Rentals plc, the UK's leading IT hardware rental company, is working in conjunction with InTechnology to offer short term hosting capability, branded Rental On-line. This new service gives businesses the opportunity to offer e-commerce without facing the high initial costs of funding a dedicated IT resource and infrastructure. Hosted by InTechnology, Rental On-line offers a quality service that will build customer confidence in new e-commerce sites. New Products In our quest to innovate and deliver cutting edge solutions to customers and to explore new markets for growth, our development team is nearing completion on a new version of VBAK that utilises DSL (Digital Subscriber Line) technology and is aimed at the small to medium enterprise market. This is a large sector that we believe would be extremely receptive to a cost effective and secure service. We are also achieving early sales interest in Managed Storage Services ('MSS'), which allows customers to outsource their data storage management to InTechnology, either on a SAN on the client site or at our data centre. Europe Having established a footprint in Germany, our aim now is to expand our online data services across Europe. There are an estimated 2 million IT networks in the European marketplace and it is our objective to supply services to at least 5% of these networks. With our first contracts now signed in Germany and a healthy pipeline of business building we look forward to making significant progress. Outlook We believe our continued growth, our ongoing product innovation and development and our dominant position in the market for data storage and online data services put InTechnology in a strong position for the future. With the investment that has been made in the past year and the encouraging sales performance, the Board plans for continued SSS profit growth and increased ODS recurring revenue streams which will move the Group into overall profitability. Staff Once again, I would like to record my thanks to our workforce for their contribution in the past year. For our sales people particularly it has been a difficult time and the achievement of sales targets is testimony to their enterprise and energy. Peter Wilkinson Chief Executive Officer 10 June 2002 Consolidated profit & loss account For the year ended 31 March 2002 Year ended Period ended 31 March 2002 31 March 2001 Note £'000 £'000 Turnover 1,2 158,108 122,398 Cost of sales (135,853) (106,873) Gross profit 22,255 15,525 Administrative expenses (104,574) (17,179) EBITDA 2,848 5,259 Depreciation (3,679) (1,437) Amortisation of goodwill (7,995) (5,476) Exceptional goodwill impairment charge 3 (73,493) - Group operating loss 2 (82,319) (1,654) Share of operating loss of associate (353) (106) Total operating loss (82,672) (1,760) Net interest receivable 178 358 Loss on ordinary activities before taxation (82,494) (1,402) Tax on loss on ordinary activities (678) (1,412) Loss sustained for the year (83,172) (2,814) Loss per share (pence) 4 Basic (60.23) (3.33) Diluted (53.65) (3.04) Adjusted (loss)/earnings per share (pence) 4 Basic (0.96) 3.15 Diluted (0.86) 2.87 EBITDA comprises earnings before interest, taxation, depreciation, goodwill impairment and amortisation. There is no difference between the loss on ordinary activities before tax and the loss sustained for the year ended 31 March 2002 and their historical cost equivalents. Consolidated statement of total recognised gains and losses For the year ended 31 March 2002 Year ended Period ended 31 March 2002 31 March 2001 £'000 £'000 Loss sustained for the year (83,172) (2,814) Exchange adjustments offset in reserves (16) - Total recognised losses relating to the year (83,188) (2,814) Prior year adjustment (see note 5) 239 - Total recognised losses since last annual report (82,949) (2,814) Consolidated balance sheet As at 31 March 2002 2002 2001 Restated Note £'000 £'000 Fixed assets Intangible assets 72,944 154,432 Tangible assets 11,811 8,541 Investment in associate - 353 84,755 163,326 Current assets Stock 11,448 9,213 Debtors 40,720 38,712 Cash at bank and in hand 23,319 26,809 75,487 74,734 Creditors - amounts falling due within one year (48,584) (42,628) Net current assets 26,903 32,106 Total assets less current liabilities 111,658 195,432 Creditors - amounts falling due after more than one year (7,169) (7,799) 104,489 187,633 Capital and reserves Called up share capital - equity 5 1,381 1,380 - non-equity 5 480 480 Share premium account 5 188,391 188,348 Profit and loss account 5 (85,763) (2,575) Shareholders' funds (including non-equity interests) 5 104,489 187,633 Shareholders' funds comprise: Equity interests 102,249 185,393 Non-equity interests 2,240 2,240 104,489 187,633 Consolidated cash flow statement For the year ended 31 March 2002 Year ended Period ended 31 March 2002 31 March 2001 Note £'000 £'000 Net cash inflow from operating activities 6 4,047 2,923 Returns on investments and servicing of finance Interest received 786 886 Interest element of finance lease payments (3) - Interest paid (605) (528) Net cash inflow from returns on investments and servicing of finance 178 358 Taxation (1,490) (1,376) Capital expenditure and financial investment Purchase of tangible fixed assets (5,308) (2,987) Sale of tangible fixed assets 117 15 Net cash outflow from capital expenditure and financial investment (5,191) (2,972) Acquisitions Purchase of subsidiary undertakings (including costs) - (10,332) Net cash at bank acquired with purchase of subsidiary undertakings - 4,473 Investment in associated undertaking - (384) Net cash outflow for acquisitions - (6,243) Net cash outflow before financing (2,456) (7,310) Management of liquid resources Decrease/(increase) in short term deposits with financial institutions 5,000 (15,000) Financing Issue of ordinary share capital 44 36,470 Expenses of share issue - (1,592) Repayment of secured loans (1,021) (759) Capital element of finance lease payments (57) - Net cash (outflow)/inflow from financing (1,034) 34,119 Increase in cash in the year 7 1,510 11,809 Notes to the preliminary announcement For the year ended 31 March 2002 2. Basis of preparation This preliminary announcement, which has been prepared on a basis consistent with the prior year with the exception of the adoption of FRS 19, does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The announcement has been agreed with the Group's auditors, PricewaterhouseCoopers, for release. Prior year financial information is prepared for the period from incorporation of InTechnology plc on 26 January 2000 to 31 March 2001. However, InTechnology did not trade until the acquisition of STORM and Vdata on 24 July 2000 and the results of these businesses are consolidated from that date. The information for the period ended 31 March 2001 is an extract from the statutory accounts to that date which have been delivered to the Registrar of Companies and on which the auditors gave an unqualified opinion. The statutory accounts for the year ended 31 March 2002 will be delivered to the Registrar following the Group's annual general meeting. 2. Segmental information Turnover Turnover (Loss)/profit before tax Before goodwill After goodwill amortisation and amortisation and impairment charge impairment charge Year Period Year Period Year Period ended ended ended ended ended ended 31 March 31 March 31 March 31 March 31 March 31 March 2002 2001 2002 2001 2002 2001 £'000 £'000 £'000 £'000 £'000 £'000 Business analysis SSS 154,013 120,348 8,823 6,978 7,123 5,813 ODS 4,095 2,050 (9,654) (3,156) (89,442) (7,467) 158,108 122,398 (831) 3,822 (82,319) (1,654) Share of operating loss of associate (353) (106) (353) (106) Net interest receivable 178 358 178 358 Total (1,006) 4,074 (82,494) (1,402) 3. Exceptional goodwill impairment charge The Board has conducted an impairment review of the carrying value of goodwill arising on acquisition of HOLF Technologies Limited and VData Limited in accordance with FRS 11. The exceptional goodwill impairment arises in respect of VData Limited. The Directors have concluded that the carrying value of the assets, including goodwill, exceed their value in use by £73,493,000. 4. (Loss)/earnings per share Basic loss per share is calculated by dividing the loss attributable to ordinary shareholders of £83,172,000, (2001: £2,814,000), by the weighted average number of ordinary shares in issue during the financial period of 138,089,272, (2001: 84,459,355). The adjusted loss per share is based on the loss after taxation after adding back amortisation of goodwill of £7,995,000, (2001: £5,476,000), exceptional goodwill impairment charge of £73,493,000, (2001: £nil), and share of operating loss of the Group's associate, eGreenhouse Limited (which ceased trading in the year) of £353,000, (2001: £nil). For diluted loss per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary shares. The weighted average number of shares in issue during the period may be reconciled to the number used in the diluted earnings per share calculation as follows: Year ended Period ended 31 March 31 March 2002 2001 Weighted average number of shares Number Number In issue during the period 138,089,272 84,459,355 Issuable on conversion of outstanding options 16,943,946 8,203,386 Used in diluted earnings per share calculation 155,033,218 92,662,741 5. Shareholders' funds Ordinary Deferred Share premium Profit & Total share shares account loss account shareholders' capital funds £'000 £'000 £'000 £'000 £'000 At 1 April 2001 as previously 1,380 480 188,348 (2,814) 187,394 reported Prior year adjustment - FRS 19 - - - 239 239 At 1 April 2001 as restated 1,380 480 188,348 (2,575) 187,633 Issue of shares: - in respect of employee share options 1 - 43 - 44 Loss sustained for the year - - - (83,172) (83,172) Exchange adjustments - - - (16) (16) At 31 March 2002 1,381 480 188,391 (85,763) 104,489 Prior year adjustment The prior year adjustment reflects the adoption of FRS 19, Deferred Taxation, with effect from 1 April 2001. FRS 19 requires deferred tax assets to be recognised to the extent that they are expected to be recoverable. Prior to 1 April 2001, the Group's accounting policy for deferred tax was in accordance with SSAP 15, which required deferred tax assets to be recognised only to the extent that they were expected to be recoverable without replacement by an equivalent asset. The recognition of deferred tax assets has been accounted for by way of a prior year adjustment, creating deferred tax assets of £239,000 at 1 April 2001. The implementation of FRS 19 has resulted in a reduction of £9,000 (2001: reduction of £nil) in loss after tax. 6. Reconciliation of operating loss to net cash inflow from operating activities Group Group 2002 2001 £'000 £'000 Operating loss (82,319) (1,654) Depreciation of tangible fixed assets 3,679 1,437 Goodwill amortisation 7,995 5,476 Exceptional goodwill impairment 73,493 - Loss/(profit) on sale of tangible fixed assets 31 (8) Increase in stocks (2,235) (180) Increase in debtors (2,017) (10,173) Increase in creditors 5,420 8,025 Net cash inflow from operating activities 4,047 2,923 7. Reconciliation of movement in net funds Year ended Period ended 31 March 2002 31 March 2001 £'000 £'000 Increase in cash in the year 1,510 11,809 Net cash outflow from decrease in finance leases 57 - (Decrease)/increase in short term deposits (5,000) 15,000 Cash outflow from repayment of debt 1,021 759 Change in net funds resulting from cash flows (2,412) 27,568 Inception of new finance leases (1,749) - Other non-cash changes in secured loans (47) - Borrowings acquired on purchase of subsidiary undertakings - (9,670) Movement in net funds in the year (4,208) 17,898 Net funds at start of year 17,898 - Net funds at end of year 13,690 17,898 8. Analysis of net funds At 1 April Cashflow Other non-cash At 31 March 2001 changes 2002 £'000 £'000 £'000 £'000 Cash at bank and in hand 11,809 1,510 - 13,319 Short term deposits 15,000 (5,000) - 10,000 Finance leases - 57 (1,749) (1,692) Debt due after more than one year (7,799) - 2,061 (5,738) Debt due within one year (1,112) 1,021 (2,108) (2,199) 17,898 (2,412) (1,796) 13,690 This information is provided by RNS The company news service from the London Stock Exchange
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