Interim Results

For Immediate Release
Friday 15 December 2000


TelMe.com plc
Interim Results for the Six Months Ended 30 September 2000
Highlights

* Turnover in Customer Relationship Management division increased by 26% compared to equivalent period last year because of important new business wins including Thomas Cook. The Group's CRM division currently accounts for around 62 per cent. of turnover and now represents core of Group's activities.

* Corporate Travel division which was loss making last year performed strongly with turnover up by 31% compared to same period last year and is now generating much improved results. Operating profits before goodwill amortisation were £0.3 m.

* Turnover in Online Services division increased by 77% compared to same period last year as a result of growth of TelMe Global Traveller and increase in sales of Ticket Window Travel software products.

* Group turnover rose by 32% overall to £8.4m (1999: £6.4m).

* Gross profit increased by 38% to £6.6m (1999:£4.8m).

* Pre-tax loss before goodwill for the half year was £0.7m (1999: £1.1m) a further significant improvement on the previous period despite non-recurring marketing launch costs of £0.4m.

* Group will continue to seek acquisitions which are complimentary to its existing business and will enable it to accelerate its growth in core markets.

Commenting on the results, Sir Gordon Brunton, Chairman said:

'The development of the Group's businesses achieved in the first half is continuing in the second half and the Directors are encouraged by the progress in the year to date.  The markets in which our businesses operate are growing and the increased scale of our operations is enabling us to take advantage of economies of scale to further improve our efficiency.  The Board remains confident in the future and I would like to thank our shareholders for their continuing support.'

For further information, please contact:

TelMe.com plc

Graham Ramsey, Chief Executive
020 7240 2640
Richard Law, Finance Director
020 7240 2640


Golin/Harris Ludgate

Richard Hews
020 7253 2252


TELME.COM PLC

Chairman's Statement - Six Months to 30 September 2000

Overview

The Group made good progress in the first half of the year and this progress has continued in the second half. At the half year, Group turnover was up by 32 per cent. compared to the same period in the previous year and gross profit was up by 38 per cent. as a result of positive growth in all of our three divisions.  

Divisional Review

Customer Relationship Management (CRM) Division (formerly CIDM Division)

In the first half of the year, turnover in this division increased by 26 per cent. compared to the equivalent period in the previous year because of important new business wins with customers such as Thomas Cook.

As a result, the division generated operating profits before goodwill amortisation of £0.6 million compared to a loss of £0.1 million in the same period last year. In the last full year, the CRM division generated profits before goodwill of £1.1 million despite the first half loss of £0.1 million and the Directors believe that the future prospects for this business are excellent.  The Group's CRM division currently accounts for around 62 per cent. of Group turnover and now represents the core of the Group's activities.  Operating profits after goodwill for the first half of the year were £0.3 million compared to a loss of £0.3 million for the same period last year.

The earnout arrangements for GB Mailing Systems Limited ('GB'), which was acquired in 1998 and which represents the bulk of the CRM division's turnover, came to an end in July 2000. As a result of the significant growth in profits since acquisition, an earnout payment of £4.0 million was made to the vendors of GB bringing total consideration to £9.0 million. The majority of the earnout payment of £4.0 million had been accrued in the accounts at the time of the acquisition and the earnout payment was satisfied by the issue of new ordinary shares at an average price of 53p determined in accordance with the terms of the acquisition agreement.

Corporate Travel Division

The Corporate Travel division has performed strongly and is now generating much improved results.  Considerable work has been performed over the last two years to improve and replace systems and reorganise management, which is now proving successful. Turnover in the first half of the year was 31 per cent. higher than in the previous year and operating profits before and after goodwill amortisation were £0.3 million (1999: £0.1 million loss) and £0.2 million (1999: £0.2 million loss) respectively.

Online Services Division

Turnover in the Group's Online Services division increased by 77 per cent. compared to the same period in the previous year as a result of the growth of the Internet Travel Service 'TelMe Global Traveller'' and the increase in sales of the Ticket Window travel suite of software products.


Operating expenses increased as a result of the increased size of the business and as a result of non-recurring marketing costs of £0.4 million associated with the launch of TelMe Global Traveller in the first quarter.  Losses in this division in the first half were £1.2 million (1999: £0.5 million).  Costs are now lower than in the first half and are expected to reduce further over the course of the year. 

It is the intention in the near future to merge the Group's Online Services division with the Corporate Travel division to bring all of the Group's travel interests under one organisational structure. The combined travel interests will then comprise a technology driven Corporate Travel Agent with clients, such as ARM, Novell, Halliburton and Schlumberger, a growing internet travel service and software sales to the travel industry in the UK and Internationally. The Directors believe that the prospects for this business are good and the Group will continue to examine ways to best develop shareholder value from these interests.

Acquisitions

It is the Group's strategy to continue to grow both organically and by acquisition.  The Group will continue to seek acquisitions which are complementary to its existing business and which enable the Group to accelerate its growth in its core markets.

Prospects

The development of the Group's businesses achieved in the first half is continuing in the second half and the Directors are encouraged by the progress in the year to date.  The markets in which our businesses operate are growing and the increased scale of our operations is enabling us to take advantage of economies of scale to further improve our efficiency.  The Board remains confident in the future and I would like to thank our shareholders for their continuing support.






Sir Gordon Brunton
Chairman

15 December 2000




CONSOLIDATED PROFIT AND LOSS ACCOUNT 
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2000



Unaudited

Unaudited

Audited


6 Months to

6 Months to

Year to

Note
30 September

30 September

31 March


2000

1999

2000


£'000

£'000

£'000
Gross sales
3





Customer Relationship Management

5,207

4,124

9,181
Online Services

3,484

607

2,498
Corporate Travel

25,534


19,023

39,917



34,225


23,754


51,596







Turnover
3





Customer Relationship Management

5,207

4,124

9,181
Online Services

1,076

607

1,306
Corporate Travel

2,142

1,629

3,487




8,425


6,360


13,974







Cost of sales

(1,840)

(1,606)

(2,965)







Gross profit

6,585

4,754

11,009







Other operating expenses (excluding goodwill amortisation)

(7,309)

(5,892)

(12,540)
Goodwill amortisation
4
(319)

(284)

(613)







Operating (loss) / profit






Customer Relationship Management

343

(303)

745
Online Services

(1,234)

(524)

(1,818)
Corporate Travel

159

(202)

(246)
Central costs


(311)

(393)

(825)


5


(1,043)



(1,422)


(2,144)
Interest receivable less payable

18


10

39







Loss on ordinary activities before taxation

(1,025)

(1,412)

(2,105)







Taxation

-

-

-







Loss on ordinary activities after taxation

(1,025)

(1,412)

(2,105)







Dividend

-

-

-







Amount transferred from reserves

(1,025)


(1,412)

(2,105)







Loss per 2.5p ordinary share (pence)
6
(1.4)


(2.0)

(3.0)







Loss per 2.5p ordinary share (pence) - diluted
6
(1.4)

(2.0)

(3.0)







Adjusted loss per 2.5p ordinary share (pence) - before goodwill amortisation
6

(1.0)


(1.6)


(2.1)



CONSOLIDATED BALANCE SHEET 
AS AT 30 SEPTEMBER 2000



Unaudited

Unaudited

Audited

Note
30 September

30 September

31 March


2000

1999

2000


£'000

£'000

£'000







Fixed assets













Intangible assets

12,017

11,824

11,838
Tangible assets

2,150

2,178

2,178



14,167



14,002


14,016







Current assets













Stocks

1

11

1
Debtors

7,855

6,636

6,752
Cash and short term deposits

2,983

3,201

4,036



10,839


9,848


10,789





















Creditors : amounts falling due within one year

(8,465)


(7,436)

(7,745)







Net current assets

2,374


2,412

3,044







Total assets less current liabilities

16,541

16,414

17,060







Creditors : amounts due in more than one year

(393)


(484)

(443)









16,148


15,930

16,617







Capital and reserves













Called up share capital

1,959

1,718

1,805
Share premium account

34,443

30,294

31,219
Merger reserve

7,757

7,389

7,757
Shares not yet issued
7
578

3,400

3,400
Profit and loss account

(28,589)


(26,871)

(27,564)



16,148



15,930


16,617



CONSOLIDATED CASHFLOW 
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2000

 
Note
Unaudited
6 Months to
30 September

Unaudited
6 Months to
30 September

Audited
Year to 
31 March


2000

1999

2000


£'000

£'000

£'000







Net cash outflow from operating activities
5(a)
(1,002)

(884)

(653)







Returns on investments and servicing of finance













Interest received

93

102

199







Interest paid

(72)

(88)

(154)







Interest element of finance lease rental payments

(3)


(4)

(6)



18


10


39
Taxation













Corporation tax paid

(8)

-

(92)







Capital expenditure and financial investment













Payments to acquire tangible fixed assets

(243)

(198)

(470)







Receipts from the sale of tangible fixed assets

3

25


54



(240)



(173)


(416)
Acquisitions and disposals













Acquisition of subsidiary undertakings

(22)

-

(42)







Net overdrafts acquired with subsidiary undertakings

-


-

29



(22)



-


(13)







Cash outflow before use of liquid resources and financing

(1,254)

(1,047)

(1,135)







Management of liquid resources













Cash withdrawn from short term deposits

18

1,302

1,997








Financing





  







Proceeds from issue of ordinary shares

-

-

990







Share issue costs

-

-

(10)







Repayment of capital element of finance leases and loans

(69)


(92)

(144)



(69)



(92)


836

Increase/(decrease) in cash

5(b)

(1,305)


163


1,698



NOTES TO THE INTERIM FINANCIAL STATEMENTS

1.
BASIS OF PREPARATION



The interim financial statements are prepared on the basis of the accounting policies set out in the annual report and accounts for the year ended 31 March 2000.




2.
PUBLICATION OF NON-STATUTORY ACCOUNTS

The financial information contained in this interim statement is unaudited and does not constitute statutory accounts as defined in section 240 of the Companies Act 1985.  The financial information for the full preceding year is based on the statutory accounts for the financial year ended 31 March 2000.  Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies.




3.
GROSS SALES



Gross sales represents the value of goods and services invoiced to customers exclusive of value added tax.  This additional disclosure is included to illustrate the impact on the value of amounts invoiced to customers of bought in services from airlines and other operators which are charged on to customers by the Corporate Travel and Online Services divisions.  Turnover for the Corporate Travel and Online Services divisions represents commission income net of the cost of bought in services invoiced out to customers.




4.
GOODWILL AMORTISATION




Unaudited

Unaudited

Audited


6 Months to

6 Months to

Year to


30 September

30 September

31 March


2000

1999

2000


£'000

£'000

£'000






Customer Relationship Management
(208)

(195)

(409)
Online Services
(21)

-

(17)
Corporate Travel
(90)

(89)

(187)







(319)

(284)

(613)




5.
OPERATING LOSS



a) Reconciliation of operating loss to operating cash flows



Unaudited

Unaudited

Audited


6 Months to

6 Months to

Year to


30 September

30 September

31 March


2000

1999

2000


£'000

£'000

£'000






Operating loss
(1,043)

(1,422)

(2,144)
Depreciation 
271

269

542
Amortisation of intangible fixed assets 
80

80

160
Goodwill amortisation 
319

284

613
(Profit) / loss on disposal of fixed assets
(3)

(1)

6
Increase in debtors
(1,106)

(640)

(726)
Decrease in stocks
-

-

10
Increase in creditors
480

546

886








(1,002)


(884)


(653)



NOTES TO THE INTERIM FINANCIAL STATEMENTS continued

b) Reconciliation of net cashflow to movement in net funds










Unaudited 
6 Months to 
30 September
Unaudited 
6 Months to 
30 September

Audited
Year to 
31 March 

2000

1999

2000

£'000

£'000

£'000






At the beginning of the period
2,110

2,277

2,277
Finance leases arising on acquisition
-

-

(12)
Decrease in debt
69

92

144
Increase/(decrease) in cash
(1,305)

163

1,698
Movement in short term deposits with banks
(18)


(1,302)

(1,997)

At the end of the period

856



1,230


2,110







c) Analysis of net funds






At 31 March

Cashflow

At 30 September

2000

Six Months

2000

£'000

£'000

£'000






Cash
3,830

(1,035)

2,795
Short term deposits
206

(18)

188

4,036

(1,053)

2,983
Bank overdraft
(1,423)

(270)

(1,693)

2,613

(1,323)

1,290
Finance leases
(72)

31

(41)
Loans
(431)


38

(393)


2,110



(1,254)


856


6.  EARNINGS PER SHARE


Earnings per share has been calculated in accordance with Financial Reporting Standard 14 by reference to the following;



Unaudited 6 Months
to 30 September
 2000

Unaudited 6 Months 
to 30 September 
1999

Audited Year to
31 March 
2000

Pence

£'000

Pence

£'000

Pence

£'000
Loss after taxation
(1.4)

(1,025)

(2.0)

(1,412)

(3.0)

(2,105)
Add goodwill amortisation
0.4

319

0.4

284

0.9

613













Adjusted loss after taxation

(1.0)



(706)


(1.6)


(1,128)


(2.1)


(1,492)

Weighted average number of shares in issue
72,360,140



68,733,884

70,080,556
Diluted weighted average number of shares
  in issue

-




-


-










72,360,140






68,733,884


70,080,556




NOTES TO THE INTERIM FINANCIAL STATEMENTS continued

7.  COMPLETION OF ACQUISITION OF GB MAILING SYSTEMS LIMITED

GB Mailing Systems Limited ('GB') was acquired by the Group in July 1998.  Under the agreement for the acquisition, deferred consideration was payable to the vendors of GB two years after the date of the acquisition, subject to performance.  In September and November 2000, the Group completed the payment of the deferred consideration for the acquisition of GB.  The total amount of deferred consideration was £3,978,000 which was paid in two tranches:

* in September 2000, £3,378,250 was satisfied by the allotment and issue of 6,172,575 ordinary shares at an issue price of 54.73 pence and a payment in cash of £21,750 to cover vendor expenses; and 

* in November 2000, £578,000 was satisfied by the allotment and issue of 1,302,388 ordinary shares at an issue price of 44.38 pence.

The authority for the Board to allot the shares and pay the cash was granted by shareholders at an Extraordinary General Meeting held at the time of the acquisition.

The accounts of the Company made up to 31 March 2000 held an amount of £3,400,000 disclosed as shares to be issued for the earnout deferred consideration.  This was the estimate of the value of the deferred consideration payable made at the time of the acquisition in July 1998.  At 30 September 2000, an amount of £578,000 is held within shares to be issued in respect of the second tranche of deferred consideration, as satisfied in November 2000.





INDEPENDENT REVIEW REPORT TO TELME.COM PLC


Introduction
We have been instructed by the company to review the interim financial information for the six months ended 30 September 2000 set out on pages 4  to 9 and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

Directors' responsibilities
The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the directors.  The Listing Rules of the Financial Services Authority require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes and the reasons for them, are disclosed.

Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board.  A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed.  A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions.  It is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit.  Accordingly, we do not express an opinion on the financial information.

Review conclusion
On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 September 2000.



Ernst & Young
Manchester


15 December 2000





5


1