RNS Number:0133N
InTechnology PLC
13 November 2001
13th November 2001
InTechnology plc
Interim Results for the six months ending 30th September 2001
Highlights
* Turnover up to #73.9m
Online Data Services (ODS)
* Over #15m of new online contracts secured and growing in excess of #
1m per month
* New services launched
* Major partnerships agreed with Compaq UK, Compaq Germany and Hewlett
Packard
Storage Solutions & Services (SSS)
* Gross margin increased to 12.2%
* Enhanced product portfolio in storage management solutions
* Consolidated our position as the UK's No 1 storage solutions provider
Commenting on the results, Lord Parkinson said:
"Security of business data and disaster recovery have become priorities for
corporations worldwide, who are realising the importance of their data and are
consequently investing in secure data back-up and retrieval. We are well
placed to take advantage of this growing market. We offer a revolutionary set
of data back-up and security products, which automatically copy data offsite,
where it is available for immediate retrieval."
For further information please contact:
Peter Wilkinson, Chief Executive 020 7786 3400
Ann-marie Wilkinson / Susan Frost Beattie Financial 020 7398 3300
CHAIRMANS STATEMENT
I am pleased to announce the interim results of InTechnology plc.
Our original business, now the Storage Solutions and Services (SSS) division,
has maintained its robust performance, in spite of difficult market
conditions. Our new Online Data Services (ODS) division has continued to
increase its revenues and expand its range of services.
Security of business data and disaster recovery have become priorities for
corporations worldwide, who are realising the importance of their data and are
consequently investing in secure data backup and retrieval.
We are well placed to take advantage of this growing market. We offer a
revolutionary set of data back-up and security products, which automatically
copy data offsite, where it is available for immediate retrieval.
Our ODS division also helps its customers to deal with the problem of shortage
of IT skills, by enabling them to outsource their data storage management and
back-up.
Trading for the six months to 30th September 2001
In the six months to 30th September 2001, the SSS business has achieved
revenues of #72 million, and an operating profit of #3.6 million before
amortisation of goodwill.
Our ODS business in the United Kingdom has achieved revenues of #1.9 million
and an operating loss of #3.5 million before amortisation of goodwill. Gross
margin increased to 12.2%. Encouragingly, ODS has now signed contracts worth
in excess of #15 million over the contracts' duration. This figure is
expected to grow significantly over the medium term and provide the company
with recurring revenue streams.
Our German ODS subsidiary has completed its start up phase and is now fully
operational. Start up costs of #1.1 million were incurred in the period.
InTechnology ended the period with cash balances of #23 million, which
together with continued positive cash flows from SSS and loan facilities, will
fund our planned growth for the foreseeable future.
Developments in the six months to 30th September 2001
Significant new product developments have occurred in the ODS division over
the past six months, and have opened up additional markets for our business.
VBAK, which caters for data volumes of up to 1 terabyte (TB), is selling well
and we have now contracted for over fifty systems.
At the end of September we launched VBAK Plus, a new service designed for data
volumes of between 1TB and 10TB. This product was developed in response to
market demands identified whilst selling VBAK.
This month we are launching Managed Storage Services (MSS) which is a real
time data replication service that manages volumes in excess of 5TB.
To ensure that the full potential of our new products is exploited, we have
entered into a number of significant partnership agreements with major
companies, who share our view of the prospects of these products:
* Compaq UK will sell both VBAK and VBAK Plus.
* Compaq Germany has signed a similar contract to Compaq UK
to sell VBAK.
* We have recently contracted with Hewlett Packard to
partner with them exclusively to provide our MSS portfolio based on their XP
storage technology.
Outlook
The SSS business is expected to maintain its profitability and cash
generation. Data storage volumes continue to grow in the UK and drive the
need to acquire cost-effective storage solutions.
We remain confident of growing the ODS business in the UK and Germany because
of the expanded product range and the marketing partnerships recently signed.
The Compaq contracts will drive VBAK sales and secure our medium term
forecasts, but commission payments in the short term will lower gross margin.
The new services, VBAK Plus and MSS have significantly higher contract values,
generating recurring revenues of up to ten times those of VBAK.
Further European expansion is planned and the Directors are exploring ways of
lowering start up costs in each country, through partnership arrangements.
The Board's strategy for the future remains to build all parts of the
business, but with the more established SSS division lending its strong
technical and financial resources to the development of the ODS business.
Recent events have underlined the importance for all businesses of data
security. InTechnology, with its comprehensive range of services, is well
equipped to help its customers to deal with this pressing problem.
The success of this business is built upon the commitment and quality of its
employees. The teamwork and dedication of the staff at InTechnology never
fails to impress me, and along with the rest of the InTechnology Board, I
would like to thank them all for their efforts.
The Rt. Hon. Lord Parkinson
Non-Executive Chairman
12 November 2001
Consolidated profit & loss account
For the 6 months ended 30 September 2001
6 months Period Period
ended ended ended
30 30 31
September September March
2001 2000 2001
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
Turnover 1&2 73,872 29,898 122,398
Cost of sales (63,493) (25,952) (106,873)
Gross profit 10,379 3,946 15,525
Administrative expenses (15,454) (4,070) (17,179)
EBITDA 532 1,705 5,259
Depreciation (1,598) (335) (1,437)
Amortisation of goodwill (4,009) (1,494) (5,476)
Group operating loss (5,075) (124) (1,654)
Share of operating loss of associate 3 (353) - (106)
Total operating loss (5,428) (124) (1,760)
Net interest receivable 146 128 358
(Loss)/profit on ordinary activities
before taxation 2 (5,282) 4 (1,402)
Tax on (loss)/profit on ordinary
activities 4 97 (448) (1,412)
Loss for the period 6 (5,185) (444) (2,814)
Loss per share (pence) 5
Basic (3.76) (0.98) (3.33)
Diluted (3.33) (0.91) (3.04)
Adjusted (loss)/earnings per share 5
(pence)
Basic (0.60) 2.32 3.15
Diluted (0.53) 2.14 2.87
EBITDA comprises earnings before interest, taxation, depreciation and
amortisation of goodwill.
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 2001 and their
historical cost equivalents.
The Group has no material 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
As at 30 September 2001
30 30 31
September September March
2001 2000 2001
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
Fixed assets
Intangible assets 150,423 158,414 154,432
Tangible assets 8,929 7,505 8,541
Investment in associate - 350 353
159,352 166,269 163,326
Current assets
Stock 10,011 10,308 9,213
Debtors 30,367 23,300 38,473
Cash at bank and in hand 22,850 31,376 26,809
63,228 64,984 74,495
Creditors - amounts falling due within
one year (33,184) (33,134) (42,628)
Net current assets 30,044 31,850 31,867
Total assets less current liabilities 189,396 198,119 195,193
Creditors - amounts falling due after
more than one year (7,143) (8,355) (7,799)
182,253 189,764 187,394
Capital and reserves
Called up share capital
equity 1,381 1,380 1,380
non-equity 480 480 480
Share premium account 188,391 188,348 188,348
Profit and loss account (7,999) (444) (2,814)
Shareholders' funds (including
non-equity interests) 182,253 189,764 187,394
Shareholders' funds comprise:
Equity interests 6 180,013 187,524 185,154
Non-equity interests 6 2,240 2,240 2,240
182,253 189,764 187,394
Consolidated cash flow statement
For the 6 months ended 30 September 2001
6 months Period Period
ended ended ended
30 30 31
September September March
2001 2000 2001
(Unaudited) (Unaudited) (Audited)
Note #'000 #'000 #'000
Net cash (outflow)/inflow from operating
activities 7 (638) 3,597 2,923
Returns on investments and servicing of
finance
Interest received 492 208 886
Interest paid (346) (80) (528)
Net cash inflow from returns on
investments and servicing of finance 146 128 358
Taxation (1,103) - (1,376)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (2,001) (841) (2,987)
Sale of tangible fixed assets 11 - 15
Net cash outflow from capital
expenditure and financial investment (1,990) (841) (2,972)
Acquisitions
Purchase of subsidiary undertakings
(including costs) - (10,332) (10,332)
Net cash at bank acquired with - 4,473 4,473
purchase of subsid. undertakings
Investment in associated undertaking - (275) (384)
Net cash outflow for acquisitions - (6,134) (6,243)
Net cash outflow before financing (3,585) (3,250) (7,310)
Management of liquid resources
Decrease/(increase) in short term
deposits with financial institutions 5,000 - (15,000)
Financing
Issue of ordinary share capital 44 36,470 36,470
Expenses of share issue - (1,592) (1,592)
Repayment of secured loans (418) (252) (759)
Net cash (outflow)/inflow from financing (374) 34,626 34,119
Increase in cash in the period 8 1,041 31,376 11,809
Notes to the interim financial information
For the 6 months ended 30 September 2001
1. Basis of preparation
The financial information included in this interim statement for the 6 months
ended 30th September 2001 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 period ended 31st March 2001. The financial information relating to
the period ended 31st March 2001 has been extracted from the statutory
accounts for that period 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.
Prior year financial information was prepared for the period from
incorporation of InTechnology plc on 26 January 2000 to 30 September 2000 and
31 March 2001. However, InTechnology did not trade until the acquisition of
STORM and VData on 24 July 2000 and the results of these businesses were
consolidated from that date.
2. Segmental information
Geographical analysis - Turnover by destination
6 months ended Period ended Period ended
30 September 30 September 2000 31 March
2001 #'000 2001
#'000 #'000
United Kingdom 73,032 29,854 122,159
Continental Europe 838 36 226
North America 2 8 13
73,872 29,898 122,398
Geographical analysis - Turnover by source
6 months ended Period ended Period ended
30 September 30 September 2000 31 March
2001 #'000 2001
#'000 #'000
United Kingdom 73,872 29,898 122,398
Continental Europe - - -
North America - - -
73,872 29,898 122,398
Geographical Analysis - (Loss)/profit before tax by source
6 months Period ended Period ended
ended
30 September 31 March
30 September 2000
2001
2001 #'000
#'000
#'000
United Kingdom (3,995) (124) (1,416)
Continental Europe (1,080) - (238)
North America - - -
(5,075) (124) (1,654)
Share of operating loss of (353) - (106)
associate
Net interest receivable 146 128 358
(5,282) 4 (1,402)
Business Analysis - Turnover
6 months ended Period ended Period ended
30 September 30 September 2000 31 March
2001 #'000 2001
#'000 #'000
SSS 72,001 29,321 120,348
ODS 1,871 577 2,050
73,872 29,898 122,398
Business Analysis - (Loss)/Profit before tax after goodwill amortisation
6 months Period ended Period ended
ended
30 September 31 March
30 September 2000
2001
2001 #'000
#'000
#'000
SSS 2,706 1,379 5,813
ODS (7,781) (1,503) (7,467)
(5,075) (124) (1,654)
Share of operating loss of (353) - (106)
associate
Net interest receivable 146 128 358
(5,282) 4 (1,402)
Business Analysis - (Loss)/profit before tax before goodwill amortisation
6 months Period ended Period ended
ended
30 September 31 March
30 September 2000
2001
2001 #'000
#'000
#'000
SSS 3,559 1,696 6,978
ODS (4,625) (326) (3,156)
(1,066) 1,370 3,822
Share of operating loss of (353) - (106)
associate
Net interest receivable 146 128 358
(1,273) 1,498 4,074
3. Share of operating loss of associate
The share of the operating loss of associate represents the losses incurred
and subsequent write-down in carrying value of the Group's 30.6% investment in
eGreenhouse Limited. The company was placed in voluntary liquidation on 3
October 2001.
4. Tax on loss on ordinary activities
No liability to corporation tax arises in the 6 months to 30 September 2001.
The taxation credit has been calculated by applying the directors' best
estimate of the effective tax rate for the year, which is 30%, (30 September
2000: 30%, 31 March 2001: 30%), to the profit, before goodwill amortisation,
for the period.
5. (Loss)/earnings per share
Basic loss per share is calculated by dividing the loss attributable to
ordinary shareholders of #5,185,000, (30 September 2000: #444,000, 31 March
2001: #2,814,000), by the weighted average number of ordinary shares in issue
during the financial period of 138,077,092, (30 September 2000: 45,325,282, 31
March 2001: 84,459,355).
The adjusted loss per share is based on the loss after taxation after adding
back amortisation of goodwill of #4,009,000, (30 September 2000: #1,494,000,
31 March 2001: #5,476,000), and share of operating loss of the Company's
associate, eGreenhouse Limited, (which ceased trading in the period), of #
353,000, (30 September 2000: #nil, 31 March 2001: #nil).
For diluted loss per share, the weighted average number of ordinary shares in
issue is adjusted to assume conversion of all dilutive potential ordinary
shares.
The weighted average number of shares in issue during the period may be
reconciled to the number used in the diluted earnings per share calculation as
follows:
6 months Period ended Period
ended ended
30 September
30 September 2000 31 March
2001 (Unaudited) 2001
(Unaudited) (Audited)
Weighted average number of shares Number Number Number
In issue during the period 138,077,092 45,325,282 84,459,355
Issuable on conversion of outstanding
options 17,573,586 3,726,474 8,203,386
Used in diluted earnings per share
calculation 155,650,678 49,051,756 92,662,741
6. Reconciliation of movements in Group shareholders' funds
6 months Period Period
ended ended ended
30 30 31
September September March
2001 2000 2001
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Loss for the period (5,185) (444) (2,814)
Proceeds of ordinary share capital
issued 1 1,380 1,380
Premium on ordinary share capital
issued 43 188,348 188,348
Non-equity share capital issued - 480 480
Net change in shareholders' funds (5,141) 189,764 187,394
Opening shareholders' funds 187,394 - -
Closing shareholders' funds 182,253 189,764 187,394
On 15 May 2001 the Company issued 101,589 ordinary shares in respect of
employee share options.
7. Reconciliation of operating loss to net cash inflow from operating
activities
6 months Period Period
ended ended ended
30 30 31
September September March
2001 2000 2001
#'000 #'000 #'000
Operating loss (5,075) (124) (1,654)
Depreciation of tangible fixed assets 1,598 335 1,437
Goodwill amortisation 4,009 1,494 5,476
Loss/(profit) on sale of tangible fixed
assets 4 - (8)
Increase in stocks (798) (1,275) (180)
Decrease/(increase) in debtors 8,203 4,826 (10,173)
(Decrease)/increase in creditors (8,579) (1,659) 8,025
Net cash (outflow)/inflow from operating
activities
(638) 3,597 2,923
8. Reconciliation of movement in net funds
6 months Period Period
ended ended ended
30 30 31
September September March
2001 2000 2001
#'000 #'000 #'000
Increase in cash in the period 1,041 31,376 11,809
(Decrease)/increase in short term deposits (5,000) - 15,000
Cash outflow from repayment of debt 418 253 759
Change in net debt resulting from cash flows (3,541) 31,629 27,568
Borrowings acquired on purchase of
subsidiary undertakings - (9,670) (9,760)
Movements in net funds in the period (3,541) 21,959 17,898
Net funds at start of period 17,898 - -
Net funds at end of period 14,357 21,959 17,898
9. Shareholder information
The interim announcement has been posted to shareholders on 16 November 2001.
Further copies are available on request from the registered office of the
Company at Nidderdale House, Beckwith Knowle, Harrogate, HG3 1SA.
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