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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:6148E
InTechnology PLC
29 October 2004
29 October 2004
InTechnology plc
Interim results for the six months ended 30 September 2004
InTechnology plc ("InTechnology" or "the Company"), Europe's leading provider of
data storage, security and network solutions and managed services, announces
interim results for the six months ended 30 September 2004. InTechnology is
reporting a strong sales performance across the Group, ahead of market
expectations, and has surpassed #65 million of cumulative contract wins in its
Managed Services division. In all areas its results are well ahead of the same
period a year ago.
Financial highlights
* Turnover increased 65% to #132.4m (2003: #80.1m) including #48.1m from
Allasso (2003: #15.1m)
o Specialist Distribution turnover of #122.1m (2003: #74.1m)
o Managed Services turnover of #10.3m (2003: #5.9m)
* Gross profit increased to #24.8m (2003: #14.5m)
* EBITDA increased to #4.3m (2003: #1.5m)
* Return to EBITA profitability with profit before interest, tax and
amortisation of goodwill of #1.2m (2003: #1.2m loss)
* Profit before tax and amortisation of goodwill of #0.15m (2003: loss
of #1.4m) after net interest payable of #1.0m (2003: #0.2m)
* Group loss before tax was #2.2m (2003: #3.5m)
* Net debt at the period end of #16.8m (2003: #13.3m)
Operational highlights
* Strong performance from the Specialist Distribution division:
o Healthy performance from new products
o Evidence of initial impact from "cross-selling" into InTechnology
and Allasso customers
o Reorganisation of UK sales to drive efficiencies and reinforce
growth
o NetConnect Training acquired for #1m in June 2004
* Managed Services has "come of age":
o Cumulative contract wins in excess of #65m at 30 September
(2003: #50m)
o #56m forward contracted order book: #20.7m of recurring revenues
as at 30 September 2004
o Material developments with selected partners, including: London
Metropolitan Network, VBAK for academia, EMC - Data replication
* Outlook
o Additional product launches anticipated for Specialist
Distribution in H2:continued pricing pressure remains across the
industry
o Three significant Managed Services initiatives for H2:
* VBAK for the SMB market
* VoIP offering
* Information Lifecycle Management (ILM) solution
o Managed Services Division expected to be EBITA positive within H2
Commenting on the results, Charles Cameron, CEO of InTechnology said:
"I am very pleased with the performance to the half-year. All parts of the
Company have performed well. Our Managed Services division has certainly come
of age. We now have a contracted forward order book of #56m at 30 September
2004 and this division is expected to generate profits before interest, tax and
amortisation during the second half.
There are several new developments, which we will launch over the next few
months, which I am confident will underpin our growth prospects and maintain our
position in the forefront of network-centric infrastructure solutions to the IT
community."
Note: 2003 comparatives are restated in the light of guidance provided on
revenue recognition by Application Note G, an amendment to FRS5. Further
details can be found in Note 1 to this interim statement.
For further information:
InTechnology plc Tel: 020 7786 3400
Charles Cameron / Andrew Kaberry
Financial Dynamics Tel: 020 7831 3113
James Melville-Ross / Juliet Clarke
Note to editors:
InTechnology plc is a 21-year-old AIM-listed public company employing 500 people
in the UK, France, Germany, Italy, Netherlands, Portugal, Spain and Switzerland.
InTechnology provides innovative IT infrastructure solutions, products and
services to business, through a network of value-added resellers, systems
integrators and consultants.
The company's offering unifies all areas of IT infrastructure to help
organisations: store data in the face of exponential growth in data volumes;
manage data for optimum business efficiency and reduced operational cost;
protect data against ever-increasing threats, from malicious attacks to data
loss; network data to capitalise on network-computing opportunities; liberate
corporate data to maximise its value for the organisation.
InTechnology also offers clients a unique range of Managed Data Services which
enables them to back up their data to a secure, off-site facility using
InTechnology's own purpose-built, data centres and high speed network
infrastructure.
For more information, please visit: www.intechnology.co.uk
Interim Results for the six months to 30 September 2004
Chairman's Statement
Overview
I was very pleased with the performance of the Group during this first six
months. Our Specialist Distribution division performed in line with
expectations with turnover well ahead of the same period a year ago. Our
Managed Services division has now surpassed the point where we can convert the
contracts we have won into profits before interest, tax and amortisation. This
division is now poised for further growth, not just in storage services, but in
several other network-centric services which our customers are increasingly
taking from us.
Trading and Operating Performance
We have performed well across the Group during the first half of the year.
Turnover increased to #132.4m during the period (2003: #80.1m) including #48.1m
from Allasso (2003: #15.1m) and gross profit improved by 71% to #24.8m (2003:
#14.5m) including #8.6m from Allasso (2003: #2.9m). Net operating expenses were
#26.0m (2003: #17.8m) and excluding depreciation and amortisation of goodwill
were #20.5m (2003: #13.0m). Earnings before interest, tax, depreciation and
amortisation of goodwill increased substantially to #4.3m (2003: #1.5m). Profit
before tax and amortisation of goodwill of #0.15m (2003: loss of #1.4m) after
net interest expense was #1.0m (2003: #0.2m). The Group reported an operating
loss of #2.2m (2003: #3.5m).
InTechnology ended the period with gross cash of #8.9m (2003: #14.3m) and net
debt after finance leases and term loans of #16.8m (30 September 2003: #13.3m,
31 March 2004: #10.4m). The increase in debt reflects the acquisitions of
Allasso and NetConnect for a total consideration of #19.8m as well as adverse
terms of trade across the industry imposed by one major vendor and investment in
MIS across the group.
Specialist Distribution Division
In the UK we are engaged in the distribution of storage, security and enterprise
software; in Continental Europe revenues are, for now, almost exclusively
derived from security software and appliances, although we have commenced sales
of selected network products during the period.
The Specialist Distribution division achieved revenues of #122.1m (2003: #74m).
Operating profit before interest and amortisation was #3.0m (2003: #3.1m).
Included in this, Continental European operations recorded a loss of #0.5m
(2003: #0.4m profit).
The sales performance from some of the relatively new products we have launched
has been encouraging. Sales of Network Appliance products, for example, have
grown well during the period and we expect this to continue. We have introduced
some Nortel network products in Spain initially and, during the second half, we
will be introducing additional network products from Juniper and other vendors
in a number of territories.
Revenues from security product sales in the UK are well ahead of the same period
a year ago, reflecting the integration of Allasso UK into InTechnology. As of 1
October we have dropped the Allasso name in the UK as we believe vendors and
reseller partners alike will benefit from engaging with a broader based company
represented under a single banner. Also, from 1 October we have implemented an
Account Manager structure for all of our key customers which will dramatically
simplify all customer contacts and make it easier for InTechnology to offer our
customers the full range of network-centric infrastructure products and services
that we carry.
In Continental Europe, revenues have increased over the comparable period but at
a lower gross margin. We have completed a thorough review of activities in each
country as well as an assessment of our pan-European product portfolio. Over
the coming months we shall be refocusing our product portfolio and look forward
subsequently to rolling out additional network, software and storage products
into selected territories which are expected to increase revenues.
Managed Services Division
Managed Services increased revenues by 75% to #10.3m (2003: #5.9m) and
cumulative contracts won now exceed the #65 million necessary in order for this
division to achieve EBITA breakeven during the second half. I believe this
division is now firmly positioned to embark on significant and profitable
growth.
Our forward contracted order book currently stands at #56m with annualised
recurring revenues of #20.7m. We have approximately 200 customers and these
customers are now increasingly taking several services from us.
During the period we announced two initiatives which clearly demonstrate the
power and effectiveness of our managed services. The first is our partnership
with the London Metropolitan Network, which is connected to some 250 academic
institutions in the southeast of England. Through this partnership we are
offering our VBAK data back-up and recovery solution to enable some of the major
universities and colleges in the area to safely store and manage their data
on-line and improve their computing resilience and compliance.
The second initiative is with EMC, where EMC are using InTechnology's UK-wide
network and data centres to offer a replicated managed solution in conjunction
with its normal product sales.
Looking ahead there are three very significant developments in our Managed
Services division which I am confident will underpin and accelerate growth in
this division:
* VBAK for the small and medium business (SMB) market: This month, we
have launched an SMB version of our VBAK back-up and recovery solution designed
for data volumes up to 1 terabyte. This segment of the market experiences
exactly the same pressures as the larger enterprise market but typically has
less resource or expertise available in-house to manage the increasing burden of
data management. Smaller companies are also increasingly being pressurised by
their larger trading partners to comply with improved standards of data
security, storage and business resilience and they are spending substantially on
their IT infrastructure.
* Voice over IP (VoIP): For several months we have piloted our own
VoIP offering to enable customers to adopt a single data network for their
corporate communication needs. We already operate Quality of Service ('QoS') on
our network to guarantee communication quality and 10 customers already use our
network to carry voice traffic. We will operate our own switch to transfer
calls to the public network and we are engaging with a number of partner
organisations to provide handsets and the billing. We are highly confident in
the pricing of our service relative to other competitors and we will be actively
promoting this service to the market and to our partners from January 2005.
* Information Lifecycle Management (ILM): Over the next twelve months
I expect the issue of storage to be slowly eclipsed by the pressure to manage,
access, archive and delete the excessive data volumes sitting within
enterprises. We have been developing a managed service to enable companies to
automate a method of storing and archiving data across a variety of storage
media (tape, disk, optical etc). Such a service would add significantly to the
current attractions of VBAK as well as existing independently. It may also lend
itself to being sold as a product through the channel (systems integrators,
consultants and resellers).
Outlook
We have made substantial progress during the first half of the year in
positioning InTechnology as the one-stop-shop IT infrastructure provider to the
channel.
The first month in the second half of this financial year has been in line with
management expectations and is ahead of the same period last year.
The computing and network needs of enterprise customers have changed
significantly in the last few years as companies use global and regional
networks to link together to conduct business. The volumes of data now being
transmitted, stored and managed securely over corporate infrastructures are
extraordinarily large and the need to access, process and use this data has
fundamentally altered the way in which customers choose to buy IT infrastructure
products and services.
The growth of our Managed Services division is a direct reflection of the
changing way in which IT infrastructure services are procured. We have a
healthy forward contracted order book and many interesting projects in our
pipeline. We have been successful in cross-selling our other newer managed
services into our customer base (particularly network services) and we expect
this trend to continue as we introduce additional services in the second half
and again in 2006.
In Specialist Distribution we are looking to increase revenues through new
product launches and more effective customer management. The acquisition of
Allasso in 2003 has provided us with an attractive incremental customer base and
products to enable this growth. While we expect some gross margin decline in
products sold in all territories, we are particularly focused on increasing the
volume of business conducted in each Continental European territory, where we
expect to introduce network products in the second half and storage and software
products in due course to bring these subsidiaries to an appropriate level of
contribution.
Changes in terms of trade with vendors and European expansion on top of our
acquisitions in 2003 has absorbed additional working capital and increased our
use of debt finance. As our Managed Services Division moves into profit we
expect net debt to reduce.
As a leading European provider of network-centric computing solutions and
services through the IT channel, I am confident that we are aligned to the most
significant trends in IT growth and that we are well positioned to take
advantage of the many opportunities open to us.
Consolidated profit & loss account
For the 6 months ended 30 September 2004
6 months ended 6 months ended Year ended
30 September 2004 30 September 2003 31 March 2004
(Unaudited) (Unaudited) (Audited, Note 1)
(Restated) (Restated)
Note #'000 #'000 #'000
Turnover 1, 2
Continuing operations 132,072 80,058 221,868
Acquisition 348 - -
132,420 80,058 221,868
Cost of sales (107,583) (65,583) (181,331)
Gross profit 24,837 14,475 40,537
Net operating expenses before depreciation
and amortisation of goodwill (20,496) (13,009) (33,524)
Depreciation (3,152) (2,648) (5,640)
Amortisation of goodwill (2,320) (2,118) (4,403)
Net operating expenses (25,968) (17,775) (43,567)
Group operating (loss)/profit
Continuing operations (1,157) (3,300) (3,030)
Acquisition 26 - -
Group operating loss 1, 2 (1,131) (3,300) (3,030)
Net interest payable (1,036) (247) (1,050)
Loss on ordinary activities
before taxation (2,167) (3,547) (4,080)
Tax on loss on ordinary activities 3 (64) 79 (809)
Loss sustained for the period (2,231) (3,468) (4,889)
EBITDA 4,341 1,466 7,013
Loss per share (pence) 4
Basic and diluted (1.61) (2.51) (3.54)
Adjusted earnings/(loss) per share (pence) 4
Basic and diluted 0.06 (0.98) (0.35)
EBITDA comprises earnings before interest, taxation, depreciation and
amortisation of goodwill.
There is no difference between the loss on ordinary activities before taxation
and the loss sustained for the period ended 30 September 2004 and their
historical cost equivalents.
Consolidated balance sheet
As at 30 September 2004
30 September 30 September 31 March
2004 2003 2004
(Unaudited) (Unaudited) (Audited)
(Restated) (Restated)
#'000 #'000 #'000
Fixed assets
Intangible assets 75,516 78,362 76,910
Tangible assets 13,497 13,372 13,443
89,013 91,734 90,353
Current assets
Stock 10,660 13,605 10,811
Debtors 84,038 66,086 90,942
Cash at bank and in hand 8,864 14,335 16,379
103,562 94,026 118,132
Creditors - amounts falling due
within one year (89,008) (71,446) (98,072)
Net current assets 14,554 22,580 20,060
Total assets less current liabilities 103,567 114,314 110,413
Creditors - amounts falling due
after more than one year (13,630) (20,805) (18,246)
Provision for liabilities & charges (50) (95) (144)
Net assets 89,887 93,414 92,023
Capital and reserves
Called up share capital - equity 1,388 1,382 1,384
- non-equity 480 480 480
Share premium account 188,508 188,392 188,420
Profit and loss account (100,489) (96,840) (98,261)
Shareholders' funds (including non-equity 89,887 93,414 92,023
interests)
Shareholders' funds comprise:
Equity interests 87,647 91,174 89,783
Non-equity interests 2,240 2,240 2,240
89,887 93,414 92,023
Consolidated cash flow statement
For the 6 months ended 30 September 2004
6 months ended 6 months ended Year ended
30 September 2004 30 September 2003 31 March 2004
(Unaudited) (Unaudited) (Audited)
(Restated) (Restated)
Note #'000 #'000 #'000
Net cash (outflow)/inflow
from operating activities 6 (538) (3,631) 3,485
Returns on investments
and servicing of finance
Interest received 107 186 324
Interest element of finance lease payments (133) (93) (220)
Interest paid (968) (340) (1,104)
Debt issue costs - - (300)
Net cash outflow from returns
on investments and servicing of finance (994) (247) (1,300)
Taxation paid (470) (511) (1,305)
Capital expenditure and financial investment
Purchase of tangible fixed assets (2,110) (2,836) (4,010)
Sale of tangible fixed assets 28 30 349
Net cash outflow from capital expenditure and
financial investment (2,082) (2,806) (3,661)
Acquisitions
Purchase of subsidiary undertakings
(including costs) (900) (18,748) (18,578)
Payment of contingent consideration
in respect of prior year acquisitions (340) - -
Net cash at bank acquired with purchase
of subsidiary undertakings - 2,731 2,731
Net cash outflow from acquisitions (1,240) (16,017) (15,847)
Net cash outflow before financing (5,324) (23,212) (18,628)
Financing
Issue of ordinary share capital 92 2 32
Net (decrease)/increase in borrowings (1,114) 19,295 18,090
Capital element of finance lease payments (1,219) 95 (1,173)
Net cash (outflow)/inflow from financing (2,241) 19,392 16,949
Decrease in cash in the period 7 (7,565) (3,820) (1,679)
Notes to the interim financial information
For the 6 months ended 30 September 2004
1. Basis of preparation
The financial information included in this interim statement for the 6 months
ended 30 September 2004 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 2004 except where described below. The financial information
relating to the year ended 31 March 2004 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.
During the period, the Group has completed a comprehensive review of its
accounting policy for revenue recognition in light of the guidance provided by
Application Note G, an amendment to FRS 5. The review identified instances
where sales of equipment have been recognised before the Group has fulfilled all
of its contractual obligations to the customer. As a result, the Group has
amended its procedures such that it now only recognises revenue on the sale of
equipment when the goods are received by the customer and when there are no
unfulfilled obligations that affect the customer's final acceptance of the
equipment. Previously, revenue was recognised on shipment of equipment to the
customer.
The cumulative effect of the changes relating to previous years has been
recognised in the interim results as a prior year adjustment and comparative
figures have been restated in accordance with the revised policy. The effects of
the changes on turnover, cost of sales, gross margin and the tax credit/charge
for the period ended 30 September 2003 and the year ended 31 March 2004 are
summarised as follows:
Turnover Cost of sales Gross margin Tax credit/(charge)
#'000 #'000 #'000 #'000
Period ended 30 September
2003 (unaudited)
As previously stated 78,729 (64,359) 14,370 111
Restated 80,058 (65,583) 14,475 79
Year ended 31 March 2004
As previously stated 223,509 (182,706) 40,803 (889)
Restated 221,868 (181,331) 40,537 (809)
The net effect of the change in policy in the year ended 31 March 2004 is to
reduce turnover by #1,641,000, reduce gross margin by #266,000, reduce the tax
charged on loss on ordinary activities by #80,000 and increase the loss
sustained for the financial year by #186,000.
The cumulative effect of implementing the new policy is to reduce Group reserves
at 31 March 2004 by #753,000 (2003: #567,000). The changes are summarised as
follows:
Debtors Creditors - amounts falling Net assets
due within 1 year
#'000
#'000 #'000
Period ended 30 September 2003 (unaudited)
As previously stated 61,016 (65,882) 93,908
Restated 66,086 (71,446) 93,414
Year ended 31 March 2004
As previously stated 83,273 (89,650) 92,776
Restated 90,942 (98,072) 92,023
The results to 31 March 2004 have been extracted from the audited accounts for
that year with the exception of the prior period adjustment described above.
2. Segmental information
Turnover by destination Turnover by source
6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
30 30 31 March 30 30 31 March
September September September September
2004 2003 2004 2004 2003 2004
(Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited) (Audited)
(Restated) (Restated) (Restated) (Restated)
#'000 #'000 #'000 #'000 #'000 #'000
Geographical
analysis
United Kingdom 104,411 71,073 184,093 104,729 71,393 185,294
Continental 25,565 8,980 37,174 27,691 8,665 36,574
Europe
North America 2,214 5 293 - - -
Africa 186 - 176 - - -
Rest of the World 44 - 132 - - -
Total 132,420 80,058 221,868 132,420 80,058 221,868
Operating (loss)/profit by source
6 months 6 months Year
ended ended ended
30 30 31 March
September September
2004 2003 2004
(Unaudited) (Unaudited) (Audited)
(Restated) (Restated)
#'000 #'000 #'000
Geographical
analysis
United Kingdom (614) (3,372) (3,787)
Continental (517) 72 757
Europe
Total (1,131) (3,300) (3,030)
Turnover Operating profit/(loss)
Before goodwill amortisation
6 months 6 months Year 6 months 6 months Year
ended ended ended ended ended ended
30 30 31 March 30 September 30 September 31 March
September September
2004 2003 2004 2004 2003 2004
(Unaudited) (Unaudited) (Audited) (Unaudited) (Unaudited) (Audited)
(Restated) (Restated) (Restated) (Restated)
#'000 #'000 #'000 #'000 #'000 #'000
Business analysis
Specialist 122,163 74,136 207,374 2,916 3,095 9,131
Distribution
Managed Services 10,257 5,922 14,494 (1,727) (4,277) (7,758)
Total 132,420 80,058 221,868 1,189 (1,182) 1,373
Operating profit/
(loss)
After goodwill amortisation
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2004 2003 2004
(Unaudited) (Unaudited) (Audited)
(Restated) (Restated)
#'000 #'000 #'000
Business analysis
Specialist 1,739 2,117 7,015
Distribution
Managed Services (2,870) (5,417) (10,045)
Total (1,131) (3,300) (3,030)
The acquisition of the trade and assets of NetConnect Training contributed
#348,000 of turnover, #42,000 of operating profit before goodwill amortisation
and #26,000 of operating profit after goodwill amortisation to the Specialist
Distribution division in the period following completion of the acquisition on
18 June 2004.
The segmental analysis above excludes net interest payable of #1,036,000 (30
September 2003: #247,000, 31 March 2004: #1,050,000) which is not analysed by
business segment.
3. Tax on loss on ordinary activities
The corporation tax charge for the 6 months to 30 September 2004 is #64,000 (30
September 2003: #79,000 credit, 31 March 2004: #809,000 charge). Taxation has
been calculated by applying the Directors' best estimate of the effective tax
rate for the period, which is 41% in the UK and approximately 37% in respect of
European operations (30 September 2003: 30% UK, 42% Europe, 31 March 2004: 30%
UK, 72% Europe) to the profit or loss, before goodwill amortisation, for the
period.
4. Loss per share
Basic loss per share is calculated by dividing the loss attributable to ordinary
shareholders of #2,231,000 (30 September 2003: #3,468,000, 31 March 2004:
#4,889,000) by the weighted average number of ordinary shares in issue during
the period of 138,569,582 (30 September 2003: 138,113,346, 31 March 2004:
138,245,916).
The adjusted basic and diluted earnings per share have been calculated to
provide a better understanding of the underlying performance of the Group as
follows:
6 months ended
30 September 2004
(Unaudited)
(Loss)/earnings Weighted average (Loss )/earnings
no.of shares per share
#'000 Pence
Basic loss per share (2,231) 138,569,582 (1.61)
Amortisation of goodwill 2,320 138,569,582 1.67
Adjusted basic earnings per share 89 138,569,582 0.06
Adjusted basic earnings per share 89 138,569,582 0.06
Effect of dilutive securities
Share options 89 9,790,459 -
Adjusted diluted earnings per share 89 148,360,041 0.06
6 months ended
30 September 2003
(Unaudited)
(Restated)
(Loss)/earnings Weighted average (Loss)/earnings
No. of shares per share
#'000 Pence
Basic loss per share (3,468) 138,113,346 (2.51)
Amortisation of goodwill 2,118 138,113,346 1.53
Adjusted basic loss per share (1,350) 138,113,346 (0.98)
Adjusted basic loss per share (1,350) 138,113,346 (0.98)
Effect of dilutive securities
Share options (1,350) - -
Adjusted diluted loss per share (1,350) 138,113,346 (0.98)
Year ended
31 March 2004
(Audited)
(Restated)
(Loss)/earnings Weighted average (Loss)/earnings
no. of shares per share
#'000 Pence
Basic loss per share (4,889) 138,245,916 (3.54)
Amortisation of goodwill 4,403 138,245,916 3.19
Adjusted basic loss per share (486) 138,245,916 (0.35)
Adjusted basic loss per share (486) 138,245,916 (0.35)
Effect of dilutive securities
Share options (486) - -
Adjusted diluted loss per share (486) 138,245,916 (0.35)
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".
5. Acquisition
On 18 June 2004 the Group acquired the trade and assets of NetConnect Training
from NetConnect Limited for cash consideration (including costs) of #900,000 and
contingent consideration to a maximum of #100,000. The contingent consideration
is dependent upon the continued employment of key personnel during the 12 month
period following completion.
The Directors estimate that the full contingent consideration of #100,000 will
become payable by 18 June 2005.
The amounts in the following table represent the provisional book and fair
values of the assets and liabilities acquired and the consideration paid:
Provisional book &
fair value to the
Group
#'000
Tangible fixed assets 47
Stock 27
Net assets 74
Goodwill arising on acquisition 926
1,000
Discharged by:
Cash consideration 900
Contingent consideration 100
Costs associated with the acquisition -
1,000
6. 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
2004 2003 2004
(Unaudited) (Unaudited) (Audited)
(Restated) (Restated)
Continuing Acquisition Total
#'000 #'000 #'000 #'000 #'000
Operating (loss)/profit (1,157) 26 (1,131) (3,300) (3,030)
Depreciation of tangible fixed assets 3,152 - 3,152 2,648 5,640
Goodwill amortisation 2,305 15 2,320 2,118 4,403
Loss/(profit) on sale of tangible fixed assets 27 - 27 2 (87)
Exchange movements - - - - (14)
Decrease/(increase) in stocks 163 - 163 (2,916) (46)
Decrease/(increase) in debtors 10,566 - 10,566 2,505 (18,999)
(Decrease)/increase in creditors and (15,635) - (15,635) (4,688) 15,618
provisions
Net cash (outflow)/inflow from operating (579) 41 (538) (3,631) 3,485
activities
7. Reconciliation of movement in net debt
6 months 6 months Year ended
ended ended
30 September 30 September 31 March
2004 2003 2004
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Decrease in cash in the period (7,565) (3,820) (1,679)
Net cash outflow/(inflow) from decrease/(increase) in 1,219 (95) 1,173
finance leases
Cash outflow/(inflow) from repayment/(advance) of debt 1,114 (19,295) (18,090)
Change in net funds resulting from cash flows (5,232) (23,210) (18,596)
Non-cash changes:
Exchange movements (69) - 162
Inception of new finance leases (1,079) - (2,134)
Finance leases on acquisition - (48) (48)
Debt issue costs (38) - 250
Movement in net funds in the period (6,418) (23,258) (20,366)
Net (debt)/funds at start of period (10,405) 9,961 9,961
Net debt at end of period (16,823) (13,297) (10,405)
8. Shareholder information
The interim announcement will be posted to shareholders on 11 November 2004.
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
IR UWAURSRRRUUA
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