Interim Results - 6 Months to 30 September 1999

Phonelink PLC 16 December 1999 PhoneLink plc Interim Results for the Six Months Ended 30 September 1999 Highlights - Strategy to establish PhoneLink as an Internet, E commerce and Business Services enterprise is showing significant progress. - Underlying business of the Group continued to show strong growth during the period. - Gross sales rose to £23.8m (1998: £9.9m). - Turnover increased to £6.4m (1998: £3.5m). - Cash balances of the Group at 10 December 1999 were £4.4m. - Loss for the half year before goodwill was £1.1 million (1998: £1.6m) a significant improvement and evidence of the Group's recovery. - Placing to raise £1 million in November 1999 will be used for marketing and promotion of Internet and E Commerce businesses. Commenting on the results, Sir Gordon Brunton, Chairman, said: 'We now have a Group of impressive businesses generating profitable revenues together with enviable Internet and E Commerce opportunities each of which are capable of transforming the performance of the Group. Most important of all we have the management resources to exploit them.' For further information, please contact: PhoneLink plc On 16 December 17 December onwards Graham Ramsey, Chief Executive 0171 283 9666 0171 283 9666 Richard Law, Finance Director 0171 283 9666 0151 608 0205 Web-site: www.phonelink.com Ludgate Communications Richard Hews 0171 253 2252 Victoria Martin PHONELINK PLC Chairman's Statement - Six Months to 30 September 1999 During the six months under review, your company has continued to build upon the strategy of the last two years to establish itself as an Internet, E Commerce and Business Services centric enterprise. This strategy is now showing significant progress. Internet and E Commerce Our proactive Internet and E Commerce strategy within our Online Services Division produced tangible results with the launch of Tel-Me Global Traveller (www.telme.com) in August 1999. This move was consolidated in early November with the acquisition of Farebase Limited ('Farebase'), a specialist provider of discount flights and holidays over the Internet (www.farebase.net). The content of Tel-Me Global Traveller and Farebase is currently being combined and the new service is scheduled for launch early next year. This service which incorporates a number of unique features now competes effectively with existing operators in this market. Based on early market experience, your directors believe that its prospects for both UK and International expansion are excellent. A vigorous marketing campaign to promote this service will commence early in the new year. In the Chief Executive's review in June 1999, Graham Ramsey indicated that PhoneLink had been retained by SmithKline Beecham to specify an E Commerce system based on PhoneLink's open platform technology which would also make use of the company's advanced mobile communications software to enable remote access. I am pleased to announce that PhoneLink was awarded the contract to tailor and supply this E Commerce system in July 1999 and it is now installed and working successfully. Another major contract to provide an E Commerce system to the Builders' Merchants Federation has been completed and further sales of PhoneLink's E Commerce technology are imminent. Business Services PhoneLink's Customer Information and Database Management business ('CIDM') has pursued its strategy of diversification during the period and has firmly established itself as a provider of database outsourcing and consultancy services in addition to its core competency as a provider of address management and marketing tools. The database outsourcing market, in which major corporates place their databases with outsourcing businesses such as ours, has seen significant growth in the last 12 months because of the increasingly specialist skills involved in database maintenance and interpretation. This market is poised for further growth in the coming year. The database management skills within this area of the Groups business are being applied to support our E Commerce and Internet activities and will enable the Group to provide further valuable services to its system and software clients. The integration of PhoneLink's DataCare telephone numbering business into the CIDM business in July of this year has enabled the product range of services offered to be expanded to include telephone number and directory services and we are currently examining ways of overlaying PhoneLink's Internet and E Commerce technology to add further value to this business. Recent client wins for this area of the Groups business include BSkyB, Trinity Mirror Plc and Scottish Power. Corporate Travel PhoneLink's Corporate Travel activities have shown strong recovery during the half year and have now re-established the level of business and profitability experienced before the downturn in the oil industry last year which affected a number of its major customers. This part of the Group provides the fulfilment for the Tel-Me Global Traveller and Farebase Internet services and is expected to expand significantly from the combined Tel-Me Global Traveller and Farebase services. A leisure travel fulfilment centre is currently being established in Aberdeen to manage the internet operation. Placing PhoneLink conducted a placing in November 1999 to raise approximately £1 million. These funds are to be used principally for the marketing and promotion of our Internet and E Commerce businesses over the coming months. Trading The underlying business of the Group continued to show strong growth during the period with gross sales of £23.8 million and turnover of £6.4 million (1998: £9.9 million and £3.5 million respectively). This was achieved despite our CIDM business being adversely affected during the period by customer sentiment over Year 2000 and a temporary fall in the price of oil which affected some of our major clients in the Corporate Travel business. These external factors which were discussed in my statement to you in June 1999 impacted on the trading performance of the Group in the early months of the half year. Since that time, underlying sales have grown strongly. This recovery has enabled the Group to generate profits before goodwill and cash from trading over the last three months to 30 November 1999. Cash balances of the Group at 10 December 1999 were £4.4 million. Short term borrowings were £1.4 million giving net cash balances available to the Group of £3 million. The loss for the half year of £1.1 million before goodwill represents a significant improvement on last year's loss before goodwill of £1.6 million and is further evidence of the recovery of the Group. As we move into the second half of the year, discounting the quiet Christmas period, we expect the recent positive progress to continue. Our performance in the second half will be dependent on the financial resource we commit to sales, marketing and development of our Internet, E Commerce and Business Services markets. It is our view that we should be bold in this regard following the impressive growth of business through Tel-Me Global Traveller since its launch in August which has seen the annualised value of bookings exceed £1 million. Name Change In line with the repositioning of the Group the Company has taken the decision to seek shareholder approval to change its name to the Tel-Me Group plc. The Company will be communicating with shareholders regarding this in the new year. Prospects The directors believe that the prospects of your company are good. We now have a Group of impressive businesses generating profitable revenues together with enviable Internet and E Commerce opportunities each of which are capable of transforming the performance of the Group. Most important of all we have the management resources to exploit them. CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 1999 Unaudited Unaudited Audited 6 Months to 6 Months to Year to Note 30 September 30 September 31 March 1999 1998 1999 £'000 £'000 £'000 Gross sales 2 Customer Information and Database Management 4,124 2,026 6,398 On-line Services 607 714 1,238 Corporate Travel 19,023 7,205 24,079 -------- -------- ------- 23,754 9,945 31,715 -------- -------- ------- Turnover 2 Customer Information and Database Management 4,124 2,026 6,398 On-line Services 607 714 1,238 Corporate Travel 1,629 739 2,378 -------- -------- ------- 6,360 3,479 10,014 Cost of sales (1,606) (1,025) (2,492) -------- -------- ------- Gross profit 4,754 2,454 7,522 Other operating expenses (excluding goodwill amortisation) (5,892) (4,220) (10,708) Goodwill amortisation (284) (121) (411) -------- -------- ------- Operating loss 3 Customer Information and Database Management (303) 105 383 On-line Services (524) (1,561) (2,896) Corporate Travel (202) (44) (310) Central costs (393) (387) (774) -------- -------- ------- (1,422) (1,887) (3,597) Loss from interest in associated undertakings - (3) (3) Interest receivable less payable 10 189 219 -------- -------- -------- Loss on ordinary activities before taxation (1,412) (1,701) (3,381) Taxation - - - -------- -------- -------- Loss on ordinary activities after taxation (1,412) (1,701) (3,381) Dividend - - - -------- -------- -------- Amount transferred from reserves (1,412) (1,701) (3,381) ======== ======== ======== Loss per 2.5p ordinary share (pence) 5 (2.0) (3.0) (5.4) -------- -------- -------- Loss per 2.5p ordinary share (pence) - diluted 5 (2.0) (3.0) (5.4) -------- -------- -------- Adjusted loss per 2.5p ordinary share (pence) - before goodwill amortisation and exceptional costs 5 (1.6) (1.8) (3.0) ======== ======== ======== CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 1999 Unaudited Unaudited Audited Note 30 September 30 September 31 March 1999 1998 1999 £'000 £'000 £'000 Fixed assets Intangible assets 11,824 12,237 12,388 Tangible assets 2,178 2,947 2,273 Investments - 6 - -------- -------- -------- 14,002 15,190 14,661 -------- -------- -------- Current assets Stocks 11 12 11 Debtors 6,636 6,507 5,996 Cash and short term deposits 3,201 4,604 4,033 -------- -------- -------- 9,848 11,123 10,040 Creditors: amount falling due within one year 6 (9,646) (7,220) (6,616) -------- -------- -------- Net current assets 202 3,903 3,424 -------- -------- -------- Total assets less current liabilities 14,204 19,093 18,085 Creditors: amounts due in greater than one year (484) (2,491) (2,953) -------- -------- -------- 13,720 16,602 15,132 ======= ======== ======= Capital and reserves Called up share capital 1,718 1,718 1,718 Share premium account 30,294 30,294 30,294 Merger reserve 7,389 7,389 7,389 Shares not yet issued 1,190 980 1,190 Profit and loss account (26,871) (23,779) (25,459) -------- -------- -------- 13,720 16,602 15,132 ======== ======== ======== CONSOLIDTED CASHFLOW STATEMENT FOR THE SIX MONTHS ENDED 30 SEPTEMBER 1999 Unaudited Unaudited Audited 6 Months to 6 Months to Year to Note 30 September 30 September 31 March 1999 1998 1999 £'000 £'000 £'000 Net cash outflow from operating activities 4(a) (884) (1,824) (1,793) -------- -------- ------- Returns on investments and servicing of finance Interest received 102 242 390 Interest paid (88) (46) (157) Interest element of finance lease rental payments (4) (7) (14) -------- -------- -------- 10 189 219 -------- -------- ------- Taxation Corporation tax paid - - (237) -------- -------- ------- Capital expenditure and financial investment Payments to acquire tangible fixed assets (198) (187) (575) Receipts from the sale of tangible fixed assets 25 59 213 -------- -------- -------- (173) (128) (362) -------- -------- -------- Acquisitions and disposals Disposal of associated undertaking - - 2 Acquisition of subsidiary undertakings - (2,533) (2,557) Net overdrafts acquired with subsidiary undertakings - (194) (194) -------- -------- -------- - (2,727) (2,749) -------- -------- -------- Cash outflow before use of liquid resources and financing (1,047) (4,490) (4,922) -------- -------- -------- Management of liquid resources Cash withdrawn from short term deposits 1,302 4,646 5,714 -------- -------- -------- Financing Share issue costs - (250) (250) Repayment of capital element of finance leases and loans (92) (46) (60) -------- -------- -------- (92) (296) (310) -------- -------- -------- Increase/(decrease) in cash 4(b) 163 (140) 482 ======== ======== ======== 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 1999. 2. 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 division. Turnover for the corporate travel division represents commission income net of the cost of bought in services invoiced out to customers. 3. EXCEPTIONAL COSTS The operating loss is stated after charging exceptional costs as follows: Unaudited Unaudited Audited 6 Months to 6 Months to Year to 30 September 30 September 31 March 1999 1998 1999 £'000 £'000 £'000 Provision against tangible fixed assets - 369 884 Redundancy costs - 100 100 Cost of aborted acquisition - 100 100 ------- ------- ------ - 569 1,084 ======= ======= ====== 4. 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 1999 1998 1999 £'000 £'000 £'000 Operating loss (1,422) (1,887) (3,597) Depreciation 269 432 840 Amortisation of intangible fixed assets 80 33 113 Provision against tangible fixed assets - 369 884 Goodwill amortisation 284 121 411 (Profit) on disposal of fixed assets (1) (10) (26) (Increase)/decrease in debtors (640) (99) 270 Decrease in stocks - 1 3 Increase/(decrease) in creditors 546 (784) (691) ------ ------ ------ (884) (1,824) (1,793) ====== ====== ====== b) Reconciliation of net cashflow to movement in funds Unaudited Unaudited Audited 6 Months to 6 Months to Year to 30 September 30 September 31 March 1999 1998 1999 £'000 £'000 £'000 At the beginning of the period 2,277 8,144 8,144 Loans arising on acquisition - - (406) Finance leases arising on acquisition - (289) (289) Decrease in debt 92 46 60 Increase/(decrease) in cash 163 (140) 482 Movement in short term deposits with banks (1,302) (4,646) (5,714) ------ ------ ------ At the end of period 1,230 3,115 2,277 ====== ====== ====== c) Analysis of net funds At 31 March Cashflow At 30 September 1999 6 Months 1999 £'000 £'000 £'000 Cash 1,830 470 2,300 Short term deposits 2,203 (1,302) 901 --------- --------- --------- 4,033 (832) 3,201 Bank overdraft (1,121) (307) (1,428) --------- --------- --------- 2,912 (1,139) 1,773 Finance leases (160) 63 (97) Loans (475) 29 (446) --------- --------- --------- 2,277 (1,047) 1,230 ========= ========= ========= 5. EARNINGS PER SHARE Earnings per share has been calculated in accordance with Financial Reporting Standard 14 by reference to the following; Earnings per share are based on Unaudited 6 Months Unaudited 6 Months to 30 September to 30 September 1999 1998 pence £'000 pence £'000 Loss after taxation (2.0) (1,412) (3.0) (1,701) Add exceptional items - - 1.0 569 Add goodwill 0.4 284 0.2 121 ------- ------- ------- ------- Adjusted loss after taxation (1.6) (1,128) (1.8) (1,011) ------- ------- ------- ------- Audited Year to 31 March 1999 pence £'000 Loss after taxation (5.4) (3,381) Add exceptional items 1.7 1,084 Add goodwill 0.7 411 ------- ------- Adjusted loss after taxation (3.0) (1,886) ------- ------- Weighted average number of shares in issue 68,733,884 56,802,996 62,768,440 Diluted weighted average number of shares in issue 6,311 - - ----------- ---------- ----------- 68,740,195 56,802,996 62,768,440 =========== ========== ========== 6. The earn out in respect of the acquisition of GB Mailing Systems Limited operates based on the period from 1 August 1999 to 31 July 2000. Under the earn out agreement the former shareholders of GB Mailing Systems Limited can earn up to a maximum additional £6.0 million. A provision has been made in the Group accounts relating to this contingent consideration of £3.4 million. A minimum of 35% of the contingent consideration will be paid in shares in accordance with the purchase agreement. Therefore, £2.2 million has been disclosed in creditors amounts due in less than one year and £1.2 million has been disclosed as shares which may be issued. The earn out agreement, however, provides that the full value of the earn out consideration may be satisfied by the issue of shares at the option of PhoneLink plc. The directors will determine the proportion of earn out which will be paid in shares at the end of the earn out period. AUDITOR'S REPORT TO THE DIRECTORS OF PHONELINK PLC We have reviewed the interim financial information for the six months ended 30 September 1999 set out on pages 5 to 10 which is the responsibility of, and has been approved by, the Directors. Our responsibility is to report on the results of our review. Our review was carried out having regard to the Bulletin, Review of interim financial information, issued by the Auditing Practices Board. This review consisted principally of obtaining an understanding of the process for the preparation of the interim financial information, applying analytical procedures to the underlying financial data, assessing whether accounting policies have been consistently applied, and making enquiries of the group management responsible for financial and accounting matters. The review excluded audit procedures such as tests of controls and verification of assets and liabilities, and was therefore substantially less in scope than an audit performed in accordance with Auditing Standards. Accordingly, we do not express an opinion on the interim financial information. On the basis of our review: - we are not aware of any material modifications that should be made to the interim financial information as presented; and - in our opinion the interim financial information has been prepared using accounting policies consistent with those adopted by the group in its accounts for the year ended 31 March 1999. Ernst & Young Manchester 16 December 1999

Companies

GB Group (GBG)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today