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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 24.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:1187M
InTechnology PLC
10 June 2003
10th June 2003
InTechnology plc
Results for the year ended 31 March 2003
InTechnology plc ("InTechnology" or "the Company"), the UK's leading provider of
data storage solutions and services, announces preliminary results for the year
ended 31 March 2003.
Financial highlights
* Turnover marginally lower at #156.9m (2002: #158.1m)
* Turnover from Storage Solutions and Services ("SSS") Division of
#148.7m (2002: #154.0m)
* Turnover from Managed Data Services ("MDS") Division increased
to #8.2m (2002: #4.1m)
* MDS cumulative contract wins of #40m (2002: #22m), which will generate
#10.5m of recurring revenue per annum (2002: #6.9m)
* Gross profit increased to #23.3m (2002: #22.3m) resulting in gross
margin of 14.8% (2002: 14.1%)
* Total operating loss of #6.6m (2002: #82.7m)
* Operating loss before amortisation of goodwill and exceptional items
of #0.9m (2002: #0.8m)
* EBITDA pre-exceptional items increased to #3.9m (2002: #2.8m)
* Balance sheet remains strong with cash reserves of #18.2m (2002:
#23.3m) and net cash of #10.0m (2002: #13.7m)
Operational highlights
* Volume of data storage products sold has increased, although prices
have continued to decline during the second half; increased market
share
* Successful ongoing cost control, including closure of loss-making
German subsidiary
* Experiencing higher levels of activity within the MDS Division
compared to six months ago; significant new customer wins in the
public and private sectors including Harvey Nichols, The Department
for Transport, Scottish Enterprise and WS Atkins
* Benefits of the UK-wide high bandwidth communications network are
beginning to be felt
* Pilot programme for a long-term data storage service progressing well
* Proposed acquisition of Allasso adds European distribution and access
to expanding security market
Commenting on the results, Charles Cameron, CEO of InTechnology said:
"These results are a reflection of InTechnology's ability to maximise its
performance and increase profitability at a time of intense industry pricing
pressure. We continue to generate cash from operating activities, our MDS
Division is attracting an increasing volume of high quality customers and, with
the pending acquisition of Allasso, we look forward to resuming top line
growth."
For further information:
InTechnology plc 020 7786 3400
Charles Cameron / Andrew Kaberry
Financial Dynamics 020 7831 3113
James Melville-Ross / Juliet Clarke
Note to editors:
InTechnology plc are experts in data storage, data management and the protection
of business critical information and are widely acknowledged by the UK IT
community as being the market leader in this field. In close partnership with
major storage suppliers such as HP, IBM, Sun, Veritas, Tivoli and CA,
InTechnology's Storage Solutions and Services Division has delivered over #1
billion worth of data storage solutions to businesses in the UK and other
European countries.
InTechnology also offers its clients a unique range of Managed Data Services.
Through this service, clients know that the security and integrity of their data
is assured with daily backups and that their files can be retrieved at will.
Using InTechnology's VBAK line of services, clients can send their data to a
secure, offsite facility using InTechnology's own, purpose built, data centres.
In February 2003, InTechnology added a new high-speed network infrastructure to
its MDS offering, thereby enabling customers to benefit from access to a wider
range of services, such as internet access and hosting.
For more information, please visit: www.intechnology.co.uk
Preliminary results for the year ended 31 March 2003
Executive Chairman's Statement
Overview
I am pleased to present the results of InTechnology plc for the year ended 31
March 2003 which show a strong performance in a challenging market for IT
expenditure.
Our strategy this year has been twofold. First and foremost, our goal has been
to align the business to manage the downturn across the IT industry by ensuring
that we maintain our significant market share. We have continued to consolidate
our position by aggressively driving volumes in our SSS Division and
successfully offering managed infrastructure services to new customers. The
result is a robust sales performance in SSS and continued growth in the value of
contract wins in MDS, which now stands in excess of #40 million (2002: #22m) and
will generate #10.5m of recurring revenue per annum (2002: #6.9m).
A focus on costs has also been necessary during the year to protect margins. The
closure of our German subsidiary and better expenditure control have enabled us
to achieve a consistent cost level, despite our investment in new services.
The second strand of our strategy has been to underpin the future success of the
business through new developments and expansion. The first of these has been
achieved through the continued progress with our MDS division, as well as
exciting new developments such as our UK-wide high bandwidth network and our
long-term data storage proposition. As far as expansion is concerned, the
proposed acquisition of Allasso not only adds distribution capability across
Europe, but also introduces a new and rapidly expanding service line to our
offering.
Trading and operating performance
As noted in our interim financial statement, we have not experienced quite the
same decline in revenues felt by much of the IT industry and believe that we
have grown our market share. The volume of data storage products sold continues
to increase but, on account of the significant price erosion, we have reported a
marginal decline in overall revenues compared to the prior year. We continue to
adopt a rigorous approach to cost control which has enabled us to maintain
reasonable profit margins.
Turnover for the year was #156.9m (2002: #158.1m) and despite the market
environment, gross profit increased to #23.3m (2002: #22.3m). Net operating
expenses before depreciation, amortisation of goodwill and exceptional items
remained consistent at #19.3m (2002: #19.4m). Total net operating expenses were
#29.8m (2002: #104.6m). Earnings before interest, tax, depreciation,
amortisation of goodwill and exceptional items improved to #3.9m (2002: #2.8m).
Total operating loss before interest and tax was #6.6m (2002: #82.7m). The
Group reported a loss for the financial year of #7.0m (2002: #83.2m) resulting
in a loss per share of 5.10p (2002: 60.23p).
InTechnology's balance sheet remains strong, with cash of #18.2m (2002: #23.3m)
and net cash, after finance leases and term loans, of #10.0m (2002: #13.7m).
SSS Division
The mix of revenues within SSS has changed over the last year with growth in our
HP, IBM and Software and Service activities offset by a decline in sales of Sun
equipment. Software and Services revenues have continued to increase and we
will continue to focus on growing these in the year ahead.
In the year, SSS has achieved revenues of #148.7m (2002: #154.0m) but, with
reduced costs, has reported a small decrease in operating margins before
goodwill amortisation to 5.5% (2002: 5.7%). Operating margin after goodwill
amortisation was 4.3% (2002: 4.6%). The Division returned an operating profit
before goodwill amortisation of #8.1m (2002: #8.8m). Divisional operating
profit before interest and tax was #6.4m (2002: #7.1m). Consultancy,
maintenance and software revenues amounted to 16.6% (2002: 12.8%) of the
Division's revenue.
MDS Division
MDS has achieved revenues of #8.2m (2002: #4.1m), with an operating loss before
goodwill amortisation and exceptional items of #9.1m (2002: #9.7m), which
reflects our ongoing investment in the division. Divisional operating loss
before interest and tax was #13.0m (2002: #89.4m loss).
The division secured a number of high profile customer wins, including
Chrysalis, Harvey Nichols, Numis, Cheshire Police, The Department for Transport,
Sitel, Scottish Enterprise and WS Atkins. Roll out and deployment of these
managed services tends to commence some months after the contract is won so the
financial impact of these recurring revenues tends not to be seen until up to
six months later.
New developments
In February 2003, we introduced a high bandwidth communications network running
through 19 of the UK's major cities to support MDS. This Wide Area LAN Extension
Service provides powerful and secure connectivity for our enterprise clients,
enabling them to backup large data volumes on a national basis rather than, as
previously, in the London area alone.
Although only recently commissioned, we are already seeing our clients benefit
from its performance and the expanded range of services we can now offer them.
Clients who have adopted our managed storage service are now also taking
internet access, hosting and pure connectivity services from us.
This spring we launched a pilot programme to test our managed long-term storage
proposition to address clients' needs to securely archive data. There is a
growing need to archive electronic records in industry and the public sector
which is driven in part by regulatory pressure. We continue to anticipate that
future data storage solutions will incorporate these features.
Operational changes
With all the indicators showing substantial potential for InTechnology's
services, especially among blue-chip companies, we have undertaken two
operational changes this year which we believe will position InTechnology more
effectively to exploit the opportunities we see in the storage market.
* We have grouped all of the development, support and sales of our Managed
Services into a single operation, accountable for the entirety of its
activities. While MDS was in its infancy, it was beneficial to separately
manage the development, support and sales of these services. They are now
sufficiently robust to be run as a single division, run by a newly appointed
executive.
* In the interests of rigorous cost control, we closed our loss-making
subsidiary in Germany in October 2002. This subsidiary was engaged purely
in the provision of managed services where we felt that greater critical
mass and relationships were required to ensure success. The intended
acquisition of Allasso is expected to provide a firmer platform for the
launch of managed services again as well as for storage product sales.
Allasso
In April 2003, we announced that we had agreed to purchase the pan-European
specialist security distributor Allasso from its parent, Articon-Integralis.
Allasso will provide us with a platform of some 7,000 additional resellers
across six European countries through which we can expand our storage sales. In
the year ended 31 December 2002 Allasso reported proforma revenues of Euro152.0m
(#104.8m)1 and EBITDA of Euro10.5m (#7.2m)1. EBIT was Euro8.3m (#5.7m)1.
The network security market, where Allasso is strongest, is an attractive
growing market and complementary to the storage market as almost all new data
storage devices are linked into networks and are in need of security.
The acquisition is conditional upon Articon-Integralis shareholder approval at a
general meeting on 23 June 2003 with anticipated completion at the end of July
2003.
Current trading
The first two months of this fiscal year show no change in the data storage
market conditions from the preceding half. The performance of our SSS Division
in this period has started in the same vein as at the start of last year.
Encouragingly, activity levels in our MDS Division remain high with a run rate
of contract wins in line with our expectations.
Outlook
Data volumes continue to grow inexorably and organisations of all sizes are
looking for solutions to the critical problems of data management and storage.
At the same time, companies everywhere are looking for ways to contain or reduce
IT spend. So, in close partnership with vendors and our customers, we will
continue to explore ways to provide the value and services that clients need.
We expect our portfolio of managed data services (which includes offsite backup,
data replication, hosting, network connectivity and other infrastructure-related
services), to become increasingly popular among our partners as a means to
enable their clients' organisations to outsource the network computing elements
of their IT which are capital intensive and time-consuming for enterprises to
manage.
Peter Wilkinson
Executive Chairman
10 June 2003
1 An exchange rate of #1 to Euro1.45 is assumed
Consolidated profit & loss account
For the year ended 31 March 2003
2003 2002
Note #'000 #'000
Turnover 2 156,899 158,108
Cost of sales (133,642) (135,853)
Gross profit 23,257 22,255
Net operating expenses before depreciation,
amortisation of goodwill and exceptional
items (19,314) (19,407)
Depreciation (4,885) (3,679)
Amortisation of goodwill (3,980) (7,995)
Exceptional costs of German subsidiary 3 (1,645) -
Exceptional goodwill impairment charge - (73,493)
Net operating expenses (29,824) (104,574)
Group operating loss (6,567) (82,319)
Share of operating loss of associate - (353)
Total operating loss (6,567) (82,672)
Net interest (payable)/receivable (108) 178
Loss on ordinary activities
before taxation 2 (6,675) (82,494)
Tax on loss on ordinary activities 4 (367) (678)
Loss sustained for the financial year (7,042) (83,172)
EBITDA 3,943 2,848
Loss per share (pence)
Basic and diluted 5 (5.10) (60.23)
Adjusted loss per share (pence)
Basic and diluted 5 (1.03) (0.96)
EBITDA comprises earnings before interest, taxation, depreciation, amortisation
of goodwill and exceptional items.
All of the activities of the Group relate to continuing operations.
There is no difference between the loss on ordinary activities before taxation
and the loss sustained for the financial year and their historical cost
equivalents.
Consolidated balance sheet
As at 31 March 2003
2003 2002
#'000 #'000
Fixed assets
Intangible assets 68,964 72,944
Tangible assets 12,179 11,811
81,143 84,755
Current assets
Stocks 9,225 11,448
Debtors 35,542 40,720
Cash at bank and in hand 18,155 23,319
62,922 75,487
Creditors - amounts falling due
within one year (45,109) (48,584)
Net current assets 17,813 26,903
Total assets less current liabilities 98,956 111,658
Creditors - amounts falling due
after more than one year (1,300) (7,169)
Provisions for liabilities and charges (209) -
Net assets 97,447 104,489
Capital and reserves
Called up share capital - equity 1,381 1,381
- non-equity 480 480
Share premium account 188,391 188,391
Profit and loss account (92,805) (85,763)
Shareholders' funds
(including non-equity interests) 97,447 104,489
Shareholders' funds comprise:
Equity interests 95,207 102,249
Non-equity interests 2,240 2,240
97,447 104,489
Consolidated cash flow statement
For the year ended 31 March 2003
2003 2002
Note #'000 #'000
Net cash inflow from operating activities 6 2,356 4,047
Returns on investments and servicing of
finance
Interest received 451 786
Interest element of finance lease payments (105) (3)
Interest paid (454) (605)
Net cash (outflow) / inflow from returns on
investments and servicing of finance (108) 178
Taxation paid (676) (1,490)
Capital expenditure and financial investment
Purchase of tangible fixed assets (3,911) (5,308)
Sale of tangible fixed assets 187 117
Net cash outflow from capital expenditure and
financial investment (3,724) (5,191)
Net cash outflow before use of liquid resources (2,152) (2,456)
and financing
Management of liquid resources
Decrease in short term deposits
with financial institutions 10,000 5,000
Financing
Issue of ordinary share capital - 44
Repayment of secured loans (2,199) (1,021)
Capital element of finance lease payments (813) (57)
Net cash outflow from financing (3,012) (1,034)
Increase in cash in the year 7 4,836 1,510
Notes to the Preliminary Announcement
1 Basis of preparation
The financial information included in this Preliminary Announcement, which has
been agreed for release by the Company's auditors, does not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985. The
financial information has been prepared on the basis of accounting policies
consistent with those set out in the statutory Annual Report and Accounts for
the year ended 31 March 2002, which have been filed with the Registrar of
Companies and on which the auditors gave an unqualified opinion. The Annual
Report and Accounts for the year ended 31 March 2003, on which the auditors have
given an unqualified opinion, will be delivered to the Registrar of Companies
and will be posted to shareholders on 8 July 2003. Further copies are available
on request from the registered office of the Company at Nidderdale House,
Beckwith Knowle, Otley Road, Harrogate, HG3 1SA.
2 Segmental information
Turnover by destination Turnover by source Loss before
taxation by
source
2003 2002 2003 2002 2003 2002
#'000 #'000 #'000 #'000 #'000 #'000
Geographical
analysis
United Kingdom 155,089 157,151 156,888 158,095 (4,922) (80,522)
Continental
Europe 1,313 941 11 13 (1,645) (1,797)
North America 497 16 - - - -
156,899 158,108 156,899 158,108 (6,567) (82,319)
Share of
operating loss of
associate -
United Kingdom - (353)
Net interest
(payable) /
receivable (108) 178
Total (6,675) (82,494)
(Loss)/profit before taxation
Before goodwill After goodwill
amortisation amortisation
and and
Turnover exceptional exceptional
items items
2003 2002 2003 2002 2003 2002
#'000 #'000 #'000 #'000 #'000 #'000
Business
analysis
SSS 148,681 154,013 8,148 8,823 6,449 7,123
MDS 8,218 4,095 (9,090) (9,654) (13,016) (89,442)
156,899 158,108 (942) (831) (6,567) (82,319)
Share of operating
loss of
associate - (353) - (353)
Net interest
(payable)/
receivable (108) 178 (108) 178
Total (1,050) (1,006) (6,675) (82,494)
Including Excluding
goodwill goodwill
2003 2002 2003 2002
#'000 #'000 #'000 #'000
Net assets
Geographical analysis
United Kingdom 97,447 103,911 28,483 30,967
Continental Europe - 578 - 578
Group Total 97,447 104,489 28,483 31,545
Business analysis
SSS 33,800 33,940 4,358 2,798
MDS 45,492 47,230 5,970 5,428
79,292 81,170 10,328 8,226
Cash 18,155 23,319 18,155 23,319
Total 97,447 104,489 28,483 31,545
3 Exceptional costs of German subsidiary
The exceptional costs of the German subsidiary represent the loss before
taxation incurred of #895,000, (2002: #1,797,000), and a provision for closure
costs in InTechnology AG of #750,000, (2002: #nil). The Company was closed on
17 October 2002.
4 Tax on loss on ordinary activities
2003 2002
#'000 #'000
Tax charge comprises:
United Kingdom corporation tax at 30% (2002: 30%)
Current (187) (599)
Under provision in respect of prior years (185) (70)
Total current tax (372) (669)
Deferred tax 5 (9)
(367) (678)
The tax charge on profits before goodwill charges is higher (2002 higher) than
the standard rate of corporation tax in the UK. The differences are explained
below:
2003 2002
#'000 #'000
Loss on ordinary activities before taxation (6,675) (82,494)
Amortisation of goodwill 3,980 7,995
Exceptional goodwill impairment charge - 73,493
(2,695) (1,006)
At standard rate of corporation tax of 30% (2002: 30%) (809) (302)
Effects of:
Expenses not deductible for tax purposes 544 159
Adjustment to tax charge in respect of previous periods 185 70
Capital allowances for year (in excess of) / lower than (41) 55
depreciation
Overseas tax rates/losses not used 493 539
Other - 148
372 669
At 31 March 2003, the Company had accumulated tax losses of approximately
#2,973,000 which are available for offset against future trading profits of
certain Group operations.
5 Loss per share
Basic loss per share is calculated by dividing the loss attributable to ordinary
shareholders of #7,042,000, (2002: #83,172,000), by the weighted average number
of ordinary shares in issue during the year of 138,101,518, (2002: 138,089,272).
The adjusted basic loss per share has been calculated to provide a better
understanding of the underlying performance of the Group as follows:
2003 2002
(Loss)/ (Loss)/ (Loss) / (Loss)/
earnings earnings earnings earnings
per share per share
#'000 pence #'000 pence
Loss attributable to
ordinary shareholders (7,042) (5.10) (83,172) (60.23)
Amortisation of
goodwill 3,980 2.88 7,995 5.79
Exceptional costs of
German subsidiary 1,645 1.19 - -
Exceptional goodwill
impairment charge - - 73,493 53.22
Share of operating loss
of associate - - 353 0.26
Adjusted basic loss per
share (1,417) (1.03) (1,331) (0.96)
The loss attributable to ordinary shareholders and the weighted average number
of ordinary shares for the purpose of calculating the diluted earnings per
ordinary share are identical to those used for basic earnings per ordinary
share. This is because the exercise of share options would have the effect of
reducing the loss per ordinary share and is therefore not dilutive under the
terms of FRS 14 "Earnings per share".
6 Reconciliation of operating loss to net cash inflow from operating activities
2003 2002
#'000 #'000
Group operating loss (6,567) (82,319)
Depreciation of tangible fixed assets 4,885 3,679
Depreciation of tangible fixed assets - exceptional
costs of German subsidiary (note 3) 89 -
Goodwill amortisation 3,980 7,995
Exceptional goodwill impairment charge - 73,493
(Profit)/loss on disposal of tangible fixed assets (41) 31
Decrease/(increase) in stocks 2,223 (2,235)
Decrease/(increase) in debtors 5,183 (2,017)
(Decrease)/increase in creditors and provisions (7,396) 5,420
Net cash inflow from operating activities 2,356 4,047
7 Analysis of net funds
At 1 April Cashflow Other non-cash At 31 March
2002 changes 2003
#'000 #'000 #'000 #'000
Cash at bank and in
hand 13,319 4,836 - 18,155
Short term deposits 10,000 (10,000) - -
Finance leases (1,692) 813 (1,577) (2,456)
Debt due after more
than one year (5,738) - 5,738 -
Debt due within one
year (2,199) 2,199 (5,738) (5,738)
Net funds 13,690 (2,152) (1,577) 9,961
8 Post balance sheet event
On 10 April 2003 InTechnology announced that it had reached agreement with
Articon-Integralis AG to acquire share capital of its subsidiaries making up the
specialist network and information security distributor business, Allasso, for
an initial consideration of Euro25.0 million (#17.2m) 1, with potential deferred
consideration of up to Euro3.8 million (#2.6m) 1. The consideration for the
acquisition will be paid in cash and will be financed from InTechnology's
internal cash resources and new borrowing facilities.
Allasso is Europe's leading specialist distributor of IT security products, with
over 220 staff and operations in six countries. In the year ended 31 December
2002 Allasso reported proforma revenues of Euro152.0m (#104.8m) 1 and EBITDA of
Euro10.5m (#7.2m) 1. EBIT was Euro8.3m (#5.7m)1.
Completion is expected on 31 July 2003, and will be subject to
Articon-Integralis shareholder approval at a shareholder meeting on 23 June
2003.
Note
1 An exchange rate of #1 to Euro1.45 is assumed
This information is provided by RNS
The company news service from the London Stock Exchange
END
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