RNS Number:4975F
InTechnology PLC
19 June 2001
'The issuer has made the following amendment to the 'Final Results'
announcement released today at 07:00 under RNS Number 4633F.
The first three bullet points in the Financial Highlights section have been
amended to reflect a 52 week comparative. All other details remain unchanged.
The full corrected version is shown below.'
PRESS RELEASE PRESS RELEASE PRESS RELEASE
19 June 2001
INTECHNOLOGY PLC
Maiden preliminary results for the trading period from 24 July 2000 to 31
March 2001 (35 weeks)
Financial Highlights
* Turnover of #122.4 million. #164.9 million proforma 52 weeks ending 31
March 2001 (2000: #101.7 million)
* EBITDA #5.3 million. #6.5 million proforma 52 weeks ending 31 March
2001 (2000: #4.9 million)
* EBIT pre goodwill amortisation #3.8 million. #4.5 million proforma 52
weeks ending 31 March 2001 (2000:#4.0 million)
* Loss on ordinary activities before tax #1.4m (ahead of expectations)
* EPS (pre goodwill amortisation) 3.15 pence
Operational Highlights
* Successful admission to AIM in March 2000
* Acquisition of Holf Technologies Limited (now Storage Solutions and
Services division ('SSS')) and VData Limited in July 2000
* Strong organic growth by SSS
* VBAK, online data backup and restore service launched in September 2000
* Strategic partnership with Compaq UK enabling them to be the
exclusive UK distributor for VBAK
* German subsidiary incorporated January 2001 launches VBAK this
summer
* Strengthening of Board through the appointment of Joe McNally, Chairman
of Compaq Computer Limited and Charles Scott, Chairman of Cordiant plc and
John Swingewood, former director of BSkyB
Commenting on the results, Lord Parkinson, Chairman said
"InTechnology has consolidated its unique position in the IT marketplace. The
strong financial performance from our established business and the potential
revenues from the new products and services we have introduced mean that we
enter the new year confident of future growth in shareholder value."
For further information contact:
Peter Wilkinson, Chief Executive, InTechnology 020 7786 3400 (today only)
Ann-marie Wilkinson, Beattie Financial 020 7398 3300/07730 415019
InTechnology plc
Maiden preliminary results for period ended 31 March 2001
InTechnology, a leading advanced data technology company, announces its
preliminary results for the trading period from 24 July 2000 to 31 March 2001,
(35 weeks).
Proforma 52
weeks
#m #m
Turnover 122.4 164.9
EBITDA 5.3 6.5
EBIT pre goodwill amortisation 3.8 4.5
Group operating loss, after goodwill (1.7)
amortisation of #5.5m
Loss on ordinary activities before tax (1.4)
Loss per share (3.33) pence
Earnings per share pre goodwill 3.15 pence
amortisation
Cash 26.8
Capital expenditure 3.0
Since the maiden results include only trading from 24 July 2000 following the
acquisition of Holf Technologies Ltd (now Storage Solutions and Services
division "SSS") and VData Ltd (now Online Data Services division "ODS") the
following unaudited proforma divisional results are published showing trading
for the 12 months ended 31 March.
12 months ended 31 March Turnover EBIT pre goodwill amortisation
2001 2000 +/(-) 2001 2000 +/(-)
#m #m % #m #m %
SSS 162.8 101.7 60 8.9 5.9 51
ODS 2.1 - n/a (4.1)L (1.9)L (116)
Group 164.9 101.7 62 4.8 4.0 20
InTechnology - -
non-recurring costs (0.2) n/a
Associate - - (0.1) n/a
Group 164.9 101.7 4.5 4.0 13
Report of the Chairman
I am pleased to report that at the end of the first accounting period since
the acquisition of HOLF Technologies Limited ('STORM') and VData Limited ('
VData'), InTechnology plc is performing well, with EBITDA of #5.3m on turnover
of #122.4m.
InTechnology plc was established to identify and acquire businesses to exploit
and develop the increasing opportunities within the technology sector. The
Group was admitted to the Alternative Investment Market ('AIM') on 2 March
2000 and on 24 July 2000 it acquired STORM and VData, both privately owned
companies which are involved in advanced computer data technology services.
Since these acquisitions InTechnology plc has grown to have the second largest
market capitalisation on AIM.
The commercial and financial strategy of InTechnology, outlined to
shareholders at the time of the STORM and VData acquisitions has developed,
but remains in broad terms, the development, provision and sale of advanced
data storage solutions and services.
The original STORM business, now branded as Storage Solutions and Services
(SSS), has grown during the last twelve months generating profits
significantly ahead of forecast. This has provided InTechnology with a strong
cash flow base from which to launch a new generation of products. The original
VData business, now branded as Online Data Services (ODS), launched its first
product, VBAK an online data backup and restore service, in September 2000.
This is now an established product and has received a positive response from
the marketplace.
The potential commercial significance of VBAK has been underlined by our
strategic partnership announced recently with Compaq Computer Limited ('
Compaq'), enabling them to be the exclusive UK distributor for the VBAK
service.
InTechnology has well-established vendor partnerships with a number of leading
computer and software manufacturers namely: Compaq, Sun, IBM, StorageTek,
Tivoli, and Veritas. InTechnology also benefits from an extensive network of
reseller channel partners. These sound alliances reinforce InTechnology's
position as a leading provider of advanced data storage solutions and I am
pleased to recognise their important contribution to our success.
The last twelve months have seen not only the expansion of the established SSS
business and the building of the new ODS business but also the opening up of
ODS operations in Europe. Our newly formed subsidiary, InTechnology AG, has a
sales office and a data centre in Munich, and has installed the technical
infrastructure to commence sales of VBAK in the German marketplace. Future
potential partnership arrangements in France and Italy are also being
explored.
InTechnology plc has an experienced and talented management team led by Peter
Wilkinson, our CEO and majority shareholder. This team has worked successfully
together for many years and, having been associated with them myself for the
past five years, I have been pleased to see during this period continuing
evidence of their energy, good judgement and determination to increase
shareholder value.
The Board of InTechnology plc has been further strengthened recently by the
appointment of Joe McNally, Chairman of Compaq, and Charles Scott, Chairman of
Cordiant plc, both as non-executive directors. I am delighted to welcome them
to the team and it is a measure of the serious expectations for the company
that these major industry figures have joined us. John Swingewood has joined
the Board as Chief Technical Officer and I am sure his technical contribution
will be important. Since the acquisition of STORM and VData, Chris Akers,
Rodger Sargent, Philip Taysom and David von Simson have all left the Board and
I would like to take this opportunity to thank them for their contribution.
I would like to express my thanks on behalf of the Board to the staff of
InTechnology plc, the majority of whom participate in the share option
schemes, for their hard work and commitment during this busy but exciting
period.
InTechnology has consolidated its unique position in the IT marketplace. The
strong financial performance from our established business and the potential
revenues from the new products and services we have introduced mean that we
enter the new year confident of future growth in shareholder value.
The Rt. Hon. Lord Parkinson
Non-executive Chairman
19 June 2001
Report of the Chief Executive
Overview 2000-2001
Following incorporation, InTechnology plc has fulfilled its main aim which was
to acquire companies in the technology sector which it could develop. In
April 2000 I was approached by their executive team with a view to acquiring
our 17 year old data storage and solutions business, HOLF Technologies
Limited, and VData Limited, our Online Data Services business. VData was in
the final development phase of its first online service - VBAK, a
revolutionary service that allows companies to backup and restore data,
efficiently and securely.
As a result of these acquisitions, InTechnology, unlike many of the new
technology companies, has a successful management team with a proven track
record in the IT industry, which complements its established business base and
enables the development of new products and services.
Our strategy in combining the two businesses was to utilise the existing and
proven business model; sales to corporate end users via an extensive network
of well established data storage reseller channel partners, to introduce new
services which could realise our objective to generate strong recurring
revenue streams.
The VBAK service was launched via this business model in September 2000.
Additional significant impetus to sales is expected through a recently
negotiated exclusive UK distribution agreement with Compaq.
Storage Solutions and Services (SSS) sales have grown by over 60% during the
past twelve months and this achievement is a reflection of our market position
as an acknowledged leader in the supply of mid to high range data storage
solutions. This UK based business, established in 1983, has grown organically
and has remained focused solely on storage products and solutions.
I am proud of these levels of growth and am confident that we will experience
continued growth in the future. Organisations continue to use more data in
their applications and require more and more advanced data storage solutions.
In addition we have invested heavily over the last few years in the technical
services team who can design and engineer complex advanced storage solutions
in a multi-vendor environment, enabling InTechnology to meet the predicted
high levels of growth in Network Attached Storage (NAS) and Storage Area
Networks (SANs). We will continue to strengthen our Technical Services team
to exploit this very exciting opportunity and to further strengthen our
position as leaders in this field.
Online Data Services (ODS)
The first services to be launched by this division were VBAK and Advanced
Infrastructure Provision (AIP).
VBAK
It is remarkable that although the IT industry has moved forward so rapidly in
the last 25 years the vital function of data backup and restore has not
changed. The VBAK service utilises our expertise in advanced data storage
solutions, data centre management and networking, to offer an automated
solution for backup and restore, storing the data securely offsite in
encrypted format onto disk.
It is typical of our dynamic approach and technical strengths that we have
been able to design the VBAK service, prove it, beta test it and win our first
customers in such a short period of time.
VBAK and its partners earn recurring revenue through customers' monthly
subscriptions, with contracts based around a three-year timescale. Most
customers are expected to increase their data over the life of the contract
thus causing revenues to increase.
I believe that we have a product which has the potential to become an industry
standard. I was delighted to announce the VBAK sales and marketing partnership
with Compaq UK, referred to above by our Chairman, and feel confident that
this powerful boost will ensure the rapid adoption of VBAK in the marketplace.
Advanced Infrastructure Provision (AIP)
UK businesses are increasingly looking to outsource the management of some
part of their IT operations and many of InTechnology's reseller channel
partners are offering hosting services to their customers. Good quality
infrastructure support is required to enable them to provide the necessary
resilience and security.
With our data centre management and secure networking skills, InTechnology is
well positioned to offer online infrastructure services to our channel
partners and through them to their customers. Early sales have shown the
potential for this service, which is an attractive proposition to the reseller
partner as it offers recurring revenues for little or no capital outlay. I am
very happy with the results that we have achieved so far.
Managed Storage Utilities (MSU)
With the increasing complexity of data storage management, MSU will provide a
suite of services that can manage a company's data storage either on their own
site via a private connection to one of InTechnology's data centres or host
the data storage offsite at an InTechnology data centre.
The main benefits of this service are its scalability to meet the surges in
demand and growth in data, reductions in customers' operational expenses, the
ability to rapidly deploy new applications and the possible elimination of
some capital expenditure.
The MSU suite of services is currently being phased in and is planned to be
fully operational by the end of 2001.
Virtual Archiving (VARC)
For both legal and commercial reasons, organisations need to keep data for
fixed periods of time. VARC is a complementary product to VBAK that takes
snapshots of the backed up data and places it in long term archive on to tape.
This is an additional service we can offer to the existing VBAK customer base,
utilising the VBAK infrastructure.
We plan to launch this service by March 2002.
Europe
InTechnology has opened its first sales office and data centre in Munich to
initially offer VBAK to the German marketplace. We plan to set up business
partnerships in Europe similar to the UK model and to roll out ODS across the
large markets of Germany, France, the Netherlands and Italy.
A skilled workforce
I would like to add my thanks to those expressed above by the Chairman for the
efforts of our staff. We have a stable workforce of many years standing and
many talented new people have joined us during the past year, increasing our
capabilities in infrastructure support, technical expertise and sales and
marketing.
Supplier relationships
We also enjoy very close relationships with all our major suppliers and are
very grateful for their support. This is particularly true now that we are
developing a new suite of online products and services that utilise their
technology to support our vision.
Property
In order to accommodate our growing activities, we have made further additions
to our Harrogate campus; a lease has been signed for a new building adjacent
to the head office and a new sales office is currently under construction
which will be fitted out by the start of 2002.
In addition we have a suite of offices at No.1 Threadneedle Street, London, in
the heart of the City, the main market for IT in the UK.
In both locations we have fully equipped and fully engineered Storage Area
Network Solution Centres (SAN Centres), where our reseller channel partners
can demonstrate and prove this new and exciting technology to their customers.
Data centres
In order to deliver all the planned Online Data Services we must have state of
the art data centres with resilience to n+1 standards. Our existing data
centres in Harrogate and London will accommodate our short term requirements
but for future growth we require substantial additional capacity. We have
considered the rent or buy options, but because of the existing over capacity
throughout our proposed European operations, have chosen to rent. This
reduces our future capital expenditure.
Advisers
We have appointed UBS Warburg as our Financial Adviser and Broker. West LB
Panmure who successfully managed the rights issue and placing continue as
Joint Broker.
Future growth
Advances in data storage and its management will become increasingly complex
with time. The level of technical skills and high capital investment required
are formidable barriers for most corporate customers. Through outsourcing,
these barriers can be reduced and InTechnology is ideally placed to benefit
from this increasing trend towards outsourcing.
We are well positioned to see further growth in our market share for SSS over
the coming years. In addition to the remote management of SANS, mentioned
previously, we are developing services in shared storage management and
complex data replication.
We are complementing the existing ODS services with new developments such as
MSU and VARC which will further assist companies in managing the ever
increasing complexity of data storage technology.
The existing strengths and skills of InTechnology promise a year of growth in
SSS with increasing revenues from ODS. With this consolidation period behind
us and our business strategy proven to be effective, we expect to increase
shareholder value significantly over the coming years.
Peter Wilkinson
Chief Executive Officer
19 June 2001
Consolidated profit and loss account
Period ended
31 March 2001
Note #'000
Turnover
Acquisitions 1 122,398
Cost of sales (106,873)
Gross profit 1 15,525
Administrative expenses (17,179)
EBITDA 5,259
Depreciation (1,437)
Amortisation of goodwill (5,476)
Operating loss
Continuing operations (223)
Acquisitions (1,431)
Group operating loss (1,654)
Share of operating loss of associate (106)
Total operating loss (1,760)
Net interest receivable 358
Loss on ordinary activities before tax (1,402)
Taxation (1,412)
Loss sustained for the period (2,814)
Loss per share (pence) 2
Basic (3.33)
Diluted (3.04)
Adjusted earnings per share (pence) 2
Basic 3.15
Diluted 2.87
EBITDA is defined as earnings before interest, taxation, depreciation and
amortisation.
There is no difference between the loss on ordinary activities before taxation
and the loss sustained for the period ended 31 March 2001 and their historical
cost equivalent.
The Group has no recognised gains or losses other than those included in the
results above, and therefore no separate statement of total recognised gains
and losses has been presented.
Consolidated balance sheet
Group
2001
Note #'000
Fixed assets
Intangible assets 4 154,432
Tangible assets 8,541
Investment in subsidiary undertakings -
Investment in associates 353
163,326
Current assets
Stock 9,213
Debtors
- due after more than one year -
- due within one year 38,473
38,473
Cash at bank and in hand 26,809
74,495
Creditors - amounts falling due
within one year (42,628)
Net current assets 31,867
Total assets less current liabilities 195,193
Creditors - amounts falling due
after more than one year (7,799)
187,394
Capital and reserves
Called up share capital 3 1,380
Non-equity share capital 3 480
Share premium account 3 188,348
Profit and loss account 3 (2,814)
Shareholders' funds (including non-equity interests) 3 187,394
Shareholders' funds comprise:
Equity interests 186,914
Non-equity interests 480
187,394
Consolidated cash flow statement
2001
Note #'000 #'000
Net cash inflow from operating activities 6 2,924
Returns on investments and servicing of finance
Interest received 886
Interest paid (528)
Net cash inflow from returns on
investments and servicing of finance 358
Taxation (1,376)
Capital expenditure and financial investment
Purchase of tangible fixed assets (2,987)
Sale of tangible fixed assets 15
Net cash outflow from capital expenditure and
financial investment (2,972)
Acquisitions
Purchase of subsidiary undertakings (including costs) 4 (10,332)
Net cash at bank acquired with purchase
of subsidiary undertakings 4 4,473
Investment in associated undertaking (384)
Net cash outflow for acquisitions (6,243)
Net cash inflow before use of liquid resources and financing (7,309)
Management of liquid resources
Increase in short term deposits with financial 5 (15,000)
institutions
Financing
Issue of ordinary share capital 36,470
Expenses of share issue (1,592)
Repayment of secured loans (759)
Net cash inflow from financing 34,119
Increase in cash in the period 7 11,810
Notes to the financial statements
1 Basis of preparation
The financial information included within this preliminary announcement has
been prepared for the period from incorporation of InTechnology plc on 26
January 2000 to 31 March 2001.
InTechnology did not trade until its acquisition of STORM and VData on 24 July
2000 and has consolidated the results of these businesses from that date. The
foregoing financial statements do not constitute statutory financial
statements within the meaning of section 240 of the Companies Act 1985. The
Group's statutory financial statements on which the Company's auditors,
PricewaterhouseCoopers, have given an unqualified opinion in accordance with
section 235 of the Companies Act 1985 are to be delivered to the Registrar of
Companies.
2 (Loss)/earnings per share
Basic loss per share is calculated by dividing the loss attributable to
ordinary shareholders by the weighted average number of ordinary shares in
issue during the financial period.
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:
(loss)/ 2001 (loss)/
Earnings Weighted Earnings
average Per share
no. of shares
#'000 Pence
Basic loss per share
Earnings attributable to ordinary (2,814) 84,459,355 (3.33)
shareholders
Effect of dilutive securities
Options - 8,203,386 0.29
Diluted loss per share (2,814) 92,662,741 (3.04)
Adjusted earnings per share has been calculated to provide a better
understanding of the underlying performance of the Group, by excluding
amortisation of goodwill, as follows:
Basic loss per share (2,814) 84,459,355 (3.33)
Amortisation of goodwill 5,476 84,459,355 6.48
Adjusted basic earnings per share 2,662 84,459,355 3.15
Diluted loss per share (2,814) 92,662,741 (3.04)
Amortisation of goodwill 5,476 92,662,741 5.91
Adjusted diluted earnings per share 2,662 92,662,741 2.87
3 Shareholders' funds
Profit & Total
Group Share Deferred Share loss shareholders'
capital shares premium account funds
#'000 #'000 #'000 #'000 #'000
At 26 January 2000
Issue of shares:
- on incorporation 10 40 - - 50
- placing on 2 March 2000 110 440 2,200 - 2,750
- placing on 24 July 2000 164 - 24,506 - 24,670
- rights issue on 24 July 60 - 8,940 - 9,000
2000
- consideration for 1,036 - 154,294 - 155,330
acquisitions
Share issue costs - - (1,592) - (1,592)
Loss for the period - - - (2,814) (2,814)
At 31 March 2001 1,380 480 188,348 (2,814) 187,394
4 Acquisitions
a) STORM
On 24 July 2000 the group acquired 100% of the issued share capital of STORM
for consideration of #39,000,000 funded by the issue of 20,102,904 1 pence
ordinary shares at a market value of #1.50 each with a value of #30,154,356
and a cash consideration of #8,845,644.
The following table sets out the book value of the identifiable assets and
liabilities acquired and their fair value to the group:
Fair value
Book value Adjustment Fair value
HOLF acquisition #'000 #'000 #'000
Net assets acquired
Fixed assets 3,982 - 3,982
Goodwill 2,242 (2,242) -
Stocks 9,033 - 9,033
Debtors 27,851 - 27,851
Cash at bank and in hand 4,424 - 4,424
Creditors due within one year (32,252) - (32,252)
Creditors due after one year (7,888) - (7,888)
Net assets 7,392 (2,242) 5,150
Consideration
20,102,904 ordinary shares @ #1.50 each 30,154
Cash 8,846
Cost of the acquisition 156
39,156
Goodwill 34,006
The fair value adjustment reflects the write-off of historic purchased
goodwill carried in the books of STORM.
The unaudited results of STORM for the period from 1 April 2000 to 24 July
2000, together with the unaudited proforma results for the year ended 31 March
2000 are shown below:
#'000 #'000
Turnover 42,267 101,677
Cost of sales (38,043) (89,342)
Gross profit 4,224 12,335
Administrative expenses (2,156) (6,149)
EBITDA 2,068 6,186
Depreciation (217) (314)
Operating profit 1,851 5,872
Net interest (167) (386)
Profit before taxation 1,684 5,486
Taxation (677) (1,724)
Profit after taxation 1,007 3,762
b) VData
On 24 July 2000 the group acquired 100% of the issued share capital of VData
for consideration of #126,000,000 funded by the issue of 83,450,000 1 pence
ordinary shares at a market value of #1.50 each with a value of #125,175,000
and a cash consideration of #825,000.
No fair value adjustments were required and the following table sets out the
book and fair value of the identifiable assets and liabilities acquired:
Book & fair value
#'000
Net assets acquired
Fixed assets 3,016
Investment 75
Debtors 449
Cash at bank and in hand 49
Creditors due within one year (1,204)
Creditors due after one year: (1,782)
Net assets 603
Consideration
83,450,000 ordinary shares @ #1.50 each 125,175
Cash 825
Costs 505
126,505
Goodwill 125,902
The unaudited results for VData for the period from 1 January 2000 to 24 July
2000 together with the audited results for the period ended 31 December 1999
are shown below:
1 January 4 January
2000 to 1999 to
24 July 2000 31 December 1999
#'000 #'000
Turnover 295 28
Cost of sales (301) (26)
Gross (loss) / profit (6) 2
Administrative expenses (1,383) (1,122)
EBITDA (1,389) (1,120)
Depreciation (490) (389)
Operating loss (1,879) (1,509)
Net interest (89) (44)
Loss before taxation (1,968) (1,553)
Taxation - -
Loss after taxation (1,968) (1,553)
Goodwill as at 31 March 2001 comprises:
#'000
Arising on acquisition of STORM (see(a)) 34,006
Arising on acquisition of VData (see (b)) 125,902
159,908
Amortisation (5,476)
154,432
5 Cash at bank and in hand
Cash at bank and in hand includes short term deposits with financial
institutions amounting to #15,000,000 which have a maturity of more than one
day but less than three months.
6 Cash flow from operating activities
Reconciliation of operating profit to net cash inflow from operating
activities:
Group
Continuing operations #'000
Operating loss (1,654)
Depreciation of tangible fixed assets 1,437
Goodwill amortisation 5,476
Profit on sale of tangible fixed assets (8)
Increase in stocks (180)
Increase in debtors (10,173)
Increase in creditors 8,025
Net cash inflow from operating activities 2,923
7 Reconciliation of movement in net funds
2001
#'000
Increase in cash in the period 11,809
Increase in short term deposits 15,000
Cash outflow from repayment of debt 759
Change in net debt resulting from cash flows 27,568
Borrowings acquired on purchase of subsidiary undertakings (9,670)
Movement in net funds in the period 17,898
Net funds at 26 January 2000 -
Net funds at 31 March 2001 17,898
8 Analysis of net funds
At 26 Cashflow Acquisitions At 31
January (excluding March
2000 Cash & 2001
Overdrafts)
#'000 #'000 #'000 #'000
Cash at hand and in bank - 11,809 - 11,809
Short term deposits - 15,000 - 15,000
Debt due after more than one year - - (7,799) (7,799)
Debt due within one year - 759 (1,871) (1,112)
- 27,568 (9,670) 17,898
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