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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:6515D
InTechnology PLC
12 November 2002
12th November 2002
InTechnology plc
Interim results for the six months ended 30 September 2002
InTechnology plc ("InTechnology" or "the Company"), the UK's leading provider of
data storage solutions and services, announces interim results for the six
months ended 30 September 2002.
Financial highlights
* Turnover up despite tough IT market at #76.0m (2001: #73.9m)
* Sales from Storage Solutions and Services Division ("SSS") of #72.3m
(2001: #72.0m)
* Turnover for Managed Data Services Division ("MDS") increased to #3.66m
(2001: #1.9m)
* Gross profit increased marginally to #10.8m (2001: #10.4m)
* EBITDA increased to #1.3m (2001: #0.5m)
* Loss before tax at #4.68m (2001 loss: #5.19m)
* Cash reserves remain strong at #16.4m
Operational highlights
* Volume of data storage products sold has increased, although prices
have declined; increased market share
* Successful ongoing cost control, including closure of loss-making
German subsidiary, has improved margins
* MDS cumulative contract wins of approximately #27m, generating #7.5m
of recurring revenue per annum
* Refocusing the MDS Division along sector lines with a broader
portfolio of solutions
* Investment in a UK-wide high bandwidth communications network to
substantially enlarge the addressable market for the MDS division beyond
the London area
* Marketing Department consolidated to raise InTechnology's corporate
profile
* Preparation for piloting a long-term data storage service
Commenting on the results, Charles Cameron, CEO of InTechnology said:
"These results show that we are continuing to strengthen our position in the
huge market of data storage. Both the SSS and the MDS divisions are growing in
line with management expectations, and the positive effects of our ongoing cost
control and operational changes will be felt progressively over the next few
quarters. We continue to have faith in the enormous potential that MDS holds
within the Group and will be maintaining a sharp focus on its move to
profitability and beyond."
"In a world where our clients' data storage volumes are soaring, we believe that
the logic for our outsourced managed service is compelling."
For further information:
InTechnology plc 020 7786 3400
Charles Cameron / Andrew Kaberry
Financial Dynamics 020 7831 3113
James Melville-Ross / Juliet Clarke
Interim Results for the six months to 30 September 2002
Chairman's Statement
Overview
I am pleased to announce the interim results for InTechnology plc, showing a
strong performance in a challenging market for IT expenditure. The sales and
operating margins achieved by our Storage Solutions and Services Division (SSS)
have been particularly impressive given the tough IT environment. Meanwhile, our
Managed Data Services Division (MDS) continues to grow the value of its contract
wins which now stands at approximately #27m, generating #7.5m of recurring
revenue per annum.
Outsourcing businesses typically have long sales cycles and we are no exception,
but growth in the Managed Data Services Division in the last six months has been
encouraging and our existing clients' commitment to our services is significant.
This autumn, at a well-attended InTechnology Users' Forum, clients made it clear
that they see our automated backup and rapid restore services as a substantial
improvement on the systems they had previously employed and a vital component of
their business continuity strategies.
Trading and Operating Performance
In the six months from April to September 2002, we have not experienced 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 and, despite marginal price erosion, our revenues for the first half of
this year are in line with last year. We have adopted a rigorous approach to
cost control that has enabled us to fractionally improve our margins by
comparison with the same period last year.
Turnover increased to #76m during the period (2001: #73.9m) and despite the
market environment, gross profit grew to #10.8m (2001: #10.4m). Total operating
costs remained consistent at #15.4m (2001: #15.4m), partly reflecting the
one-off cost of the closure of our German subsidiary and our ongoing investment
in the MDS Division. Earnings before interest, tax, depreciation and
amortisation improved to #1.3m (2001: #0.5m). The Group reported a loss in
ordinary activities before taxation of #4.7m (2001: #5.2m) resulting in a loss
per share for the period of 3.39p (2001: 3.76p).
InTechnology's balance sheet remains strong, with cash of #16.4m (2001: #22.9m).
SSS Division
In the period, the Storage Solutions and Services Division has achieved revenues
of #72,295,000, (2001: #72,001,000) and maintained operating margins at
approximately 5%. The Division returned an operating profit before goodwill
amortisation of #3,572,000, (2001: #3,559,000). Consultancy and software
revenues amounted to 10%, (2001: 9%), of total income.
SSS did not generate a positive cash flow by the period end because we took
advantage of stock purchase opportunities and there is a tendency for sales to
be more calendar quarter- end driven by Vendors. However we expect SSS to be
cash positive during the second half of the fiscal year.
MDS Division
Managed Data Services has achieved revenues of #3,662,000, (2001: #1,871,000),
with an operating loss before goodwill amortisation and exceptional items of
#4,567,000, (2001: #4,625,000), which reflected our ongoing investment in this
side of the business.
The MDS Division secured a number of customer wins during the period, including
Chrysalis, Harvey Nichols, Numis, Cheshire Police, ASA Computers and IMG. Roll
out and deployment of managed services to the DTI and Railtrack also commenced
during the first six months of this year, although we will not see the impact of
recurring revenue from these deployments until the second half of the year.
New Developments
I should like to highlight two new developments in our business:
* In September, we invested in the installation of a high bandwidth
communications network, which runs through 19 of the UK's major cities, to
support the development of InTechnology's Managed Data Services. 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.
The investment in this network, together with the investment in our own Data
Centres, means that we have a resilient, secure and powerful infrastructure,
entirely under our own control, which major clients can access at lower cost.
* Our development team in Harrogate has worked successfully on a solution
to manage online long term data storage. All organisations today are facing the
business and technical challenges of rapidly-increasing data volumes. It is
vital that not only current business-critical data is backed up securely and is
available for rapid recall, but also that important data from previous months
and years is archived securely to meet regulatory, legal and financial
requirements.
InTechnology's solution, which we expect to introduce as a prototype with
selected clients in the first calendar quarter of next year, will help companies
prioritise their data, give them ready access to their critical data and control
the storage of archive data more economically.
Operational restructuring
With all the indicators showing substantial potential for InTechnology's
services, especially among blue-chip companies, we have re-structured our
organisation in several ways to exploit these market opportunities more
effectively:
* Sales activities for InTechnology's Managed Data Services have been
organised to focus on specific market sectors in which have already successfully
deployed our services - Financial Services, Professional Services, Public Sector
and Industrial;
* A Group Marketing Department has been created to coordinate the
marketing activities more effectively from both parts of our business and to
raise the Company's profile in key markets with our partners;
* As data storage is an increasingly complex issue for customers, we are
keen to offer the expertise of our consultancy teams as a first stage in
designing solutions to meet their requirements. The former head of our
Consultancy Division, Tim Wilkinson, has now been appointed to lead our Managed
Data Services; and
* In the interests of rigorous cost control, we have closed our
loss-making subsidiary in Germany. We will, however, continue to work with
partners to expand our continental European activities. While we remain
committed to growing both divisions of our business in mainland Europe, we
believe that any such growth requires greater critical mass in new territories
than we have enjoyed in Germany.
Board change
On 1 July 2002, Charles Cameron joined InTechnology as Chief Executive Officer
and I have now assumed the role of Chairman. Prior to joining us, Charles was
an executive director within the investment banking division of Goldman Sachs,
where he advised many of Europe's largest companies. He has been instrumental
in instigating and implementing many of the operational changes we have made in
recent months.
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.
We expect to see demand increase for our consultancy services, leading to sales
of the appropriate hardware and software for companies to use in-house.
Our Managed Data Services portfolio of offsite backup, hosting and other
infrastructure-related services, are likely to be increasingly popular as client
organisations seek to outsource these areas of IT which are expensive and
time-consuming for them to manage for themselves.
In all client engagements, for both our divisions, we will continue to work with
partners that complement our skills and bring value to end-user clients.
The second half has started in line with management expectations and the Board
is confident that InTechnology has the appropriate market position, range of
services and technical excellence to meet clients' needs for the management,
protection and storage of electronic data, both on-site and remotely.
Peter Wilkinson
Executive Chairman
12 November 2002
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 & CA InTechnology
has delivered over #1 billion worth of data storage solutions to businesses in
the UK and other European countries.
InTechnology also offers clients a unique range of Managed Data Services which
enables them to back up their data to a secure, offsite facility using
InTechnology's own, purpose built, data centres and high speed network
infrastructure.
For more information, please visit: www.intechnology.co.uk
Consolidated profit & loss account
For the 6 months ended 30 September 2002
6 months ended 6 months ended Year ended
30 September 2002 30 September 2001 31 March 2002
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
Turnover 2 75,957 73,872 158,108
Cost of sales (65,129) (63,493) (135,853)
Gross profit 10,828 10,379 22,255
Net operating expenses before depreciation,
amortisation and exceptional items (9,493) (9,847) (19,407)
Depreciation (2,330) (1,598) (3,679)
Amortisation of goodwill (1,996) (4,009) (7,995)
Exceptional costs of German subsidiary 3 (1,645) - -
Exceptional goodwill impairment charge - - (73,493)
Net operating expenses (15,464) (15,454) (104,574)
Group operating loss (4,636) (5,075) (82,319)
Share of operating loss of associate - (353) (353)
Total operating loss (4,636) (5,428) (82,672)
Net interest (payable)/receivable (47) 146 178
Loss on ordinary activities
before taxation 2 (4,683) (5,282) (82,494)
Tax on loss on ordinary activities 4 - 97 (678)
Loss sustained for the period 6,7 (4,683) (5,185) (83,172)
EBITDA 1,335 532 2,848
Loss per share (pence) 5
Basic (3.39) (3.76) (60.23)
Diluted (2.98) (3.33) (53.65)
Adjusted loss per share (pence) 5
Basic (0.75) (0.60) (0.96)
Diluted (0.66) (0.53) (0.86)
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 period ended 30 September 2002 and their
historical cost equivalents.
Consolidated balance sheet
As at 30 September 2002
30 September 30 September 31 March
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
Fixed assets
Intangible assets 70,948 150,423 72,944
Tangible assets 11,703 8,929 11,811
82,651 159,352 84,755
Current assets
Stock 13,021 10,011 11,448
Debtors 43,825 30,367 40,720
Cash at bank and in hand 16,433 22,850 23,319
73,279 63,228 75,487
Creditors - amounts falling due
within one year (49,371) (33,184) (48,584)
Net current assets 23,908 30,044 26,903
Total assets less current liabilities 106,559 189,396 111,658
Creditors - amounts falling due
after more than one year (6,001) (7,143) (7,169)
Provision for liabilities & charges 3 (750) - -
Net assets 99,808 182,253 104,489
Capital and reserves
Called up share capital - equity 1,381 1,381 1,381
- non-equity 480 480 480
Share premium account 188,391 188,391 188,391
Profit and loss account (90,444) (7,999) (85,763)
Shareholders' funds (including non-equity interests) 99,808 182,253 104,489
Shareholders' funds comprise:
Equity interests 7 97,568 180,013 102,249
Non-equity interests 7 2,240 2,240 2,240
99,808 182,253 104,489
Consolidated cash flow statement
For the 6 months ended 30 September 2002
6 months ended 6 months ended Year ended
30 September 2002 30 September 2001 31 March 2002
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
Net cash (outflow)/inflow
from operating activities 8 (4,352) (638) 4,047
Returns on investments
and servicing of finance
Interest received 229 492 786
Interest element of finance lease payments (30) - (3)
Interest paid (246) (346) (605)
Net cash (outflow)/inflow from returns
on investments and servicing of finance (47) 146 178
Taxation paid (557) (1,103) (1,490)
Capital expenditure and financial investment
Purchase of tangible fixed assets (1,845) (2,001) (5,308)
Sale of tangible fixed assets 941 11 117
Net cash outflow from capital expenditure and
financial investment (904) (1,990) (5,191)
Net cash outflow before financing (5,860) (3,585) (2,456)
Management of liquid resources
Decrease in short term deposits
with financial institutions 5,000 5,000 5,000
Financing
Issue of ordinary share capital - 44 44
Repayment of secured loans (794) (418) (1,021)
Capital element of finance lease payments (232) - (57)
Net cash outflow from financing (1,026) (374) (1,034)
(Decrease)/increase in cash in the period 9 (1,886) 1,041 1,510
Notes to the interim financial information
For the 6 months ended 30 September 2002
1. Basis of preparation
The financial information included in this interim statement for the 6 months
ended 30 September 2002 does not constitute statutory accounts within the
meaning of section 240 of the Companies Act 1985 and is not audited or reviewed.
The financial information has been prepared on the basis of accounting policies
consistent with those set out in the statutory accounts for the year ended 31
March 2002. The financial information relating to the year ended 31 March 2002
has been extracted from the statutory accounts for that year which have been
filed with the Registrar of Companies and on which the auditors gave an
unqualified opinion.
This interim statement will be posted on the Company's website, in addition to
the paper version. The maintenance and integrity of the InTechnology website is
the responsibility of the directors and work carried out by the auditors does
not involve consideration of these matters. Legislation in the United Kingdom
governing the preparation and dissemination of the financial information may
differ from legislation in other jurisdictions.
2. Segmental information
Turnover by destination Turnover by source Profit/(loss) before tax by
source
6 months 6 months Year 6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended ended ended ended
30 30 31 30 30 31 30 30 31
September September March September September March September September March
2002 2001 2002 2002 2001 2002 2002 2001 2002
(Unaudited)(Unaudited)(Audited)(Unaudited)(Unaudited)(Audited) (Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Geographical
analysis
United Kingdom 75,701 73,032 157,151 75,947 73,872 158,095 (2,991) (3,995) (80,522)
Continental 248 838 941 10 - 13 (1,645) (1,080) (1,797)
Europe
North America 8 2 16 - - - - - -
75,957 73,872 158,108 75,957 73,872 158,108 (4,636) (5,075) (82,319)
Share of operating
loss of associate (353) (353)
Net interest (payable)/receivable (47) 146 178
Total (4,683) (5,282) (82,494)
Turnover Profit/(loss) before tax Profit/(loss) before tax
Before goodwill amortisation After goodwill amortisation
and exceptional items and exceptional items
6 months 6 months Year 6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended ended ended ended
30 30 31 30 30 31 March 30 30 31
September September March September September September September March
2002 2001 2002 2002 2001 2002 2002 2001 2002
(Unaudited)(Unaudited) (Audited) (Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Business
analysis
SSS 72,295 72,001 154,013 3,572 3,559 8,823 2,720 2,706 7,123
MDS 3,662 1,871 4,095 (4,567) (4,625) (9,654) (7,356) (7,781) (89,442)
75,957 73,872 158,108 (995) (1,066) (831) (4,636) (5,075) (82,319)
Share of operating
loss of associate - (353) (353) (353) (353)
Net interest (payable)/receivable (47) 146 178 (47) 146 178
Total (1,042) (1,273) (1,006) (4,683) (5,282) (82,494)
3. Exceptional costs of German subsidiary
The exceptional costs of the German subsidiary represent the losses before tax
incurred of #895,000, (30 September 2001: #1,080,000, 31 March 2002:
#1,797,000), and a provision for closure costs in InTechnology AG of #750,000,
(30 September 2001: #nil, 31 March 2002: #nil). The Company was closed on 17
October 2002.
4. Tax on loss on ordinary activities
No corporation tax charge or credit arises in the 6 months to 30 September 2002,
(30 September 2001: #97,000 credit, 31 March 2002: #678,000 charge).
Taxation has been calculated by applying the directors' best estimate of the
effective tax rate for the period, which is 30%, (30 September 2001: 30%, 31
March 2002: 30%), to the profit or loss, before goodwill amortisation, for the
period.
5. Loss per share
Basic loss per share is calculated by dividing the loss attributable to ordinary
shareholders of #4,683,000, (30 September 2001: #5,185,000, 31 March 2002:
#83,172,000), by the weighted average number of ordinary shares in issue during
the financial period of 138,101,518, (30 September 2001: 138,077,092, 31 March
2002: 138,089,272).
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.
Reconciliations of the loss and weighted average number of shares used in the
calculations are set out below:
6 months ended 6 months ended Year ended
30 September 2002 30 September 2001 31 March 2002
(Unaudited) (Unaudited) (Audited)
Loss Weighted (Loss)/ Loss Weighted (Loss)/ Loss Weighted (Loss)/
average earnings average earnings average earnings
no. of per no.of per no. of per
shares share shares share shares share
#'000 Pence #'000 Pence #'000 Pence
Basic loss (4,683) 138,101,518 (3.39) (5,185) 138,077,092 (3.76) (83,172) 138,089,272 (60.23)
per share
Loss
attributable
to ordinary
shareholders
Effect of
dilutive
securities
Options (4,683) 18,907,242 0.41 (5,185) 17,573,586 0.43 (83,172) 16,943,946 6.58
Diluted (4,683) 157,008,760 (2.98) (5,185) 155,650,678 (3.33) (83,172) 155,033,218 (53.65)
loss per
share
Adjusted loss per share has been calculated to provide a better understanding of
the underlying performance of the Group, by excluding amortisation of goodwill
and exceptional items as follows:
6 months ended 6 months ended Year ended
30 September 2002 30 September 2001 31 March 2002
(Unaudited) (Unaudited) (Audited)
(Loss)/ Weighted (Loss)/ (Loss)/ Weighted (Loss)/ (Loss)/ Weighted (Loss)/
earnings average earnings earnings average earnings earnings average earnings
no. of per no. of per no. of per
shares share shares share shares share
#'000 Pence #'000 Pence #'000 Pence
Basic (4,683) 138,101,518 (3.39) (5,185) 138,077,092 (3.76) (83,172) 138,089,272 (60.23)
loss per
share
Amortisation 1,996 138,101,518 1.45 4,009 138,077,092 2.90 7,995 138,089,272 5.79
of goodwill
Exceptional 1,645 138,101,518 1.19 - 138,077,092 - - 138,089,272 -
costs of
German
subsidiary
Exceptional - 138,101,518 - - 138,077,092 - 73,493 138,089,272 53.22
goodwill
impairment
charge
Exceptional - 138,101,518 - 353 138,077,092 0.26 353 138,089,272 0.26
loss on disposal
of associate
Adjusted (1,042) 138,101,518 (0.75) (823) 138,077,092 (0.60) (1,331) 138,089,272 (0.96)
basic
loss per
share
Diluted (4,683) 157,008,760 (2.98) (5,185) 155,650,678 (3.33) (83,172) 155,033,218 (53.65)
loss per
share
Amortisation 1,996 157,008,760 1.27 4,009 155,650,678 2.57 7,995 155,033,218 5.16
of goodwill
Exceptional 1,645 157,008,760 1.05 - 155,650,768 - - 155,033,218 -
costs
of German
subsidiary
Exceptional - 157,008,760 - - 155,650,678 - 73,493 155,033,218 47.40
goodwill
impairment
charge
Exceptional - 157,008,760 - 353 155,650,678 0.23 353 155,033,218 0.23
loss on
disposal
of associate
Adjusted (1,042) 157,008,760 (0.66) (823) 155,650,678 (0.53) (1,331) 155,033,218 (0.86)
diluted
loss per
share
6. Consolidated statement of total recognised gains and losses
6 months ended 6 months ended Year ended
30 September 2002 30 September 2001 31 March 2002
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Loss sustained for the period (4,683) (5,185) (83,172)
Exchange adjustments offset in reserves 2 - (16)
Total recognised losses relating to the period (4,681) (5,185) (83,188)
Prior year adjustment on adoption of FRS 19 - - 239
Total recognised losses since last annual report (4,681) (5,185) (82,949)
7. Reconciliation of movements in Group shareholders' funds
6 months ended 6 months ended Year ended
30 September 2002 30 September 2001 31 March 2002
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Loss sustained for the period (4,683) (5,185) (83,172)
Other recognised losses relating to the period 2 - (16)
Nominal value of ordinary share capital issued - 1 1
Premium on ordinary share capital issued - 43 43
Net change in shareholders' funds (4,681) (5,141) (83,144)
Opening shareholders' funds 104,489 187,394 187,633
Closing shareholders' funds 99,808 182,253 104,489
8. Reconciliation of operating loss to net cash (outflow)/inflow from operating activities
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Operating loss (4,636) (5,075) (82,319)
Depreciation of tangible fixed assets - UK 2,330 1,598 3,679
Depreciation of tangible fixed assets - exceptional
costs of German subsidiary (note 3) 89 - -
Goodwill amortisation 1,996 4,009 7,995
Exceptional goodwill impairment charge - - 73,493
Loss on sale of tangible fixed assets 24 4 31
Increase in stocks (1,573) (798) (2,235)
(Increase)/decrease in debtors (3,105) 8,203 (2,017)
Increase/(decrease) in creditors 523 (8,579) 5,420
Net cash (outflow)/inflow from operating activities (4,352) (638) 4,047
9. Reconciliation of movement in net funds
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2002 2001 2002
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
(Decrease)/increase in cash in the period (1,886) 1,041 1,510
Net cash outflow from decrease in finance leases 232 - 57
Decrease in short term deposits (5,000) (5,000) (5,000)
Cash outflow from repayment of debt 794 418 1,021
Change in net funds resulting from cash flows (5,860) (3,541) (2,412)
Non-cash changes:
Inception of new finance leases (1,428) - (1,749)
Other non-cash changes in secured loans - - (47)
Movement in net funds in the period (7,288) (3,541) (4,208)
Net funds at start of period 13,690 17,898 17,898
Net funds at end of period 6,402 14,357 13,690
10. Shareholder information
The interim announcement will be posted to shareholders by 21 November 2002.
Further copies are available on request from the registered office of the
Company at Nidderdale House, Beckwith Knowle, Harrogate, HG3 1SA.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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