Interim Results

Auxinet PLC 5 October 2000 On behalf of:Auxinet plc. Date: 5 October 2000. Interim Statement For the six months ended 30 June 2000. Highlights * DataCash performance well above expectation enabling acceleration in new products. * Transaction volumes in excess of 10 times those of a year ago. Processed almost 500,000 transactions in August 2000; continuing to win significant new accounts. * Retail Decisions deal will bring valuable opportunities. * Demand for recruitment services in high tech and telecoms sector has increased. * Launch of rocketscience and boldly-go.com have been successful. * Board is optimistic that DataCash will move into profit in the second half of 2001. Chairman's Statement. The first six months of the year have seen the Company make significant progress in all areas. The figures reflect the acquisition of DataCash only from the 22nd March, providing a combined turnover for the Group of £2,043,000 and an operating loss before exceptional items for the period of £828,000. The DataCash business has performed well above expectation, which has enabled us to accelerate our investment in new products, as well as expanding our sales and customer support operations. The monthly growth in the volumes of transactions has slowed a little over the summer months, although we are still running at figures in excess of ten times those of a year ago. In August we processed almost 500,000 transactions. Our model, which is based upon competitiveness and value, continues to help DataCash win significant new accounts. We are confident that we remain the pre-eminent independent Payment Solution Provider ('PSP') of choice for the active on-line merchants. Among accounts won recently are Whitbread and Homebase demonstrating the extent to which the 'dotcorps' are now beginning to enter the on-line market. We have also signed a world-wide deal with our first US mainland based client, Cue Corporation, and are confident that our recently announced partnership with Retail Decisions, for whom we have become the recommended PSP, will provide valuable additional opportunities while enabling us to offer richer fraud screening functionality to our client base. Our policy of using resellers as a prime marketing channel continues to work well and more resellers are signing each month while new client acquisition is accelerating towards the e-Christmas of 2000. The Executive search recruitment business, CorpExec, began the year with a fairly thin 'order book', reflecting the already reported poor performance in the last quarter of 1999. However, partly reflecting the Y2K hiatus, but more importantly as a response to buoyant demand in the high tech and telecoms sectors, the demand for our services has built throughout the period. In addition, our strategy of building the executive search team and developing our contingency recruitment offering, rocket-science, together with the launch of our online recruitment business, boldly-go.com, has been very successful. The first half saw record levels of mandates and turnover of £1,748,000, an increase of 28% over the corresponding period last year. The divisional loss before exceptional items of £334,000 reflects the heavy investment reported above in our new recruitment businesses, but we now have a strong order book and turnover is running at record monthly run rates. We anticipate a record level of profit from the recruitment business in the second six months, with a commensurate contribution to cash flow. The boldly-go.com business, which was launched in March, is exceeding expectations and is now anticipated to be profitable much sooner than anticipated. This is proving to be a very valuable component of the Group 'offering' and we are examining ways of further developing this activity, especially into the international market. We are investing heavily in expanding the functionality of the DataCash software as well as developing new products and services for our clients and partners and believe that these initiatives will provide further rapid growth for the Company and further differentiation between DataCash and its competitors. Our new payment product, to be launched shortly, will, we believe, provide greater security and functionality to the on-line payments world. The initial response from potential B2B and B2C partners has been enthusiastic and we will report further on this development in the annual report. We are optimistic that the DataCash business will move into profit in the second half of 2001, ahead of expectations. As at 30th June 2000, the Group had cash balances of £6 million. With positive cashflow expected from the recruitment activity in the second half and into the future, the Board is confident that it has the necessary resources to take advantage of the significant opportunities that exist for the Group. David Bailey Chairman 5 October 2000 For further information, please contact: David Bailey Auxinet plc 020 7759 7900 John Coyle Clerkenwell Communications 020 7713 0900 0370 687 370 07699727 796 (pager) Consolidated profit and loss account (unaudited) For the 6 months ended 30 June 2000 Continuing operations Acquisitions Total 6 months 6 months 6 months 6 months ended ended ended ended 30 June 30 June 30 June 30 June Note 2000 2000 2000 2000 Turnover 1,748 295 2,043 1,364 Administrative expenses - exceptional items 2 provision for national insurance on share option gains (44) (70) (114) - - other (1,641) (560) (2,201) (1,226) - allocated group costs (441) (229) (670) - ----- --- ----- ----- Total administrative expenses (2,126) (859) (2,985) (1,226) ----- --- ----- ----- Operating (loss)/profit before exceptional item (334) (494) (828) 138 Exceptional items (44) (70) (114) - ----- --- ----- ----- Operating (loss)/profit (378) (564) (942) 138 Interest receivable and similar income 89 - Interest payable and similar charges (11) (14) ----- ----- (Loss)/profit on ordinary activities before taxation (864) 124 Tax on loss on ordinary activities - 4 ----- ----- (Loss)/profit on ordinary activities after taxation (864) 128 Dividends - - - ----- ----- Retained (loss)/profit for the period (864) 128 ----- ----- Basic earnings per share 3 (0.31)p 0.08p Basic earnings per share before exceptional item (0.27)p 0.08p There were no recognised gains or losses other than those shown in the profit and loss account. There are no differences between historical cost profits and losses and those shown above. Consolidated balance sheet (unaudited) As at 30 June 2000 As at As at 30 June 30 June 2000 1999 £000 £000 Fixed assets Intangible assets 19,791 - Tangible assets 324 208 ------- ------- 20,115 208 ------- ------- Current assets Debtors 1,903 703 Cash at bank and in hand 6,006 591 ------- ------- 7,909 1,294 ------- ------- Creditors Amounts falling due within one year (2,170) (530) ------- ------- Net current assets 5,739 764 ------- ------- Total assets less current liabilities 25,854 972 Creditors Amounts falling due after more than one year (21) (127) Provisions for liabilities and charges (247) - -------- ------- Net assets 25,586 845 -------- ------- Capital and reserves Called up share capital 378 156 Share premium account 26,419 686 Share scheme reserve 19 100 Merger reserve (124) (124) Profit and loss account (1,106) 27 ------- ------- Equity shareholders' funds 25,586 845 ------- ------- Consolidated cash flow statement (unaudited) For the 6 months ended 30 June 2000 6 months 6 months ended 30 ended 30 June 2000 June 1999 £000 £000 Net cash (outflow)/inflow from operating activities (933) 189 ---- ---- Returns on investments and servicing of finance Interest received 89 6 Overdraft interest and similar charges (1) - Interest element of finance lease rental payments (10) (20) ---- ---- Net cash inflow/(outflow) from returns on investments and servicing of finance ---- ---- 78 (14) ---- ---- Taxation Corporation tax paid (including ACT) - - ---- ---- Tax paid - - ---- ---- Capital expenditure Purchase of tangible fixed assets (137) - Sale of tangible fixed assets - 19 ---- ---- Net cash (outflow)/inflow from capital expenditure (137) 19 ---- ---- Acquisitions and disposals Investments in subsidiary undertakings (204) - ---- ---- Net cash outflow from acquisitions and disposals (204) - ---- ---- Net cash (outflow)/inflow before management ------ ---- of liquid resources and financing (1,196) 194 ------ ---- Management of liquid resources Increase in short term bank deposits (5,077) - ------ ---- Net cash outflow from management of liquid resources (5,077) - ------- ---- Financing Capital element of finance lease rental payments (80) (30) Issue of Ordinary Share Capital including premium net of expenses 6,755 - Exercise of share options 6 - ------- ----- Net cash inflow/(outflow) from financing 6,681 (30) ------- ----- Increase in cash in the period 408 164 ------- ----- Notes (1)Basis of preparation The results for the six months ended 30 June 2000 and the comparative figures for the six months ended 30 June 1999 are unaudited. They have been prepared on accounting bases and policies that are consistent with those used in the preparation of the financial statements of the Group for the period ended 31 December 1999. The financial information contained in this report does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985 (as amended). The results for the period ended 31 December 1999 were reported on by the auditors and received an unqualified report and contained no statement under Section 237(2) or (3) of the Companies Act 1985 (as amended). Full accounts have been delivered to the Registrar of Companies. Basis of consolidation The unaudited consolidated accounts for auxinet plc incorporate the results of auxinet plc and its subsidiary undertakings using the acquisition accounting method. The results of subsidiary undertakings are included from the date of acquisition. Goodwill Goodwill arising on the acquisition of a subsidiary undertaking by the Group is the difference between the fair value of the consideration paid and the fair value of the assets and liabilities acquired. In the opinion of the Directors, there is no readily discernible method of ascertaining the economic life of the goodwill arising on the acquisition of DataCash Limited. Accordingly, they currently consider it more appropriate to carry out annual impairment reviews rather than amortise such goodwill over an arbitrarily chosen number of years. Schedule 4 of the Companies Act 1985 requires that goodwill is amortised over a finite period. The Directors consider that such a treatment would fail to give a true and fair view. The effect on the Group's balance sheet of this departure is to recognise goodwill of £19.7 million and for no amortisation charge to be made in arriving at the loss for the period. (2) The exceptional item in 2000 relates to the following: A charge of £114,000 representing national insurance contributions on 15,343,185 outstanding share options issued in the period 6 April 1999 to 30 June 2000. The provision is calculated at the current national insurance rate of 12.2% applied to the difference between the exercise price and the market price of 17.5p at 30 June 2000. (3) Basic earnings per share for the six months ended 30 June 2000 have been calculated on the basis of the loss after taxation for the period of £864,000 and the average number of shares in issue during the period of 279,052,000. (4) Reconciliation of operating (loss)/profit to operating cash flows Six months Six months ended 30 ended 30 June 2000 June 1999 £000 £000 Operating (loss)/profit (942) 138 Outflow relating to 114 - exceptional items Operating (loss)/profit before exceptional charges (828) 138 Depreciation 74 69 Loss on sale of fixed assets 2 - (Increase)/decrease in debtors (552) 3 Increase/ (decrease) in creditors 371 (21) ---- --- Net cash (outflow)/inflow from (933) 189 operating activities ---- --- (5) Following an extraordinary general meeting held on 22 March 2000 the Company acquired 100% of the issued share capital of DataCash Limited, consideration for the acquisition being satisfied by the issue of 158,732,000 consideration shares at 6p per share. On the same date the Company raised approx £6.5 million, net of expenses, by way of a placing of 60,000,000 subscription shares at 12p per share, and Gavin Breeze agreed to sell 16,000,000 of the consideration shares also at 12p per share. The Company changed its name from Corporate Executive Search International plc to auxinet plc. On the same date employees holding options under the DataCash share option scheme exchanged such options for an equivalent number of options under the auxinet share option scheme. On 24 March 2000 Gavin Breeze was appointed to the Board.

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