1st Quarter Results

Intec Telecom Systems PLC 19 February 2001 Intec Telecom Systems PLC Unaudited results for the three months ended 31st December 2000 - Q1 Intec remains on course for sustained growth and performance. Intec Telecom Systems PLC ('Intec' or 'the Company'), a leading provider of telecoms Operations Support Systems ('OSS'), today announces its unaudited results for the three months ended 31 December 2000, the first quarter of its 2001 year ('Q1'). The Company is pleased to report Q1 performance in line with the Directors' expectations, and that the current trading environment meets the Director's expectations for both the core Intec business and new acquisitions. HIGHLIGHTS * Turnover for Q1 over the equivalent period (3 months ended 31 December 1999) increased by 66% to £4.4m (including US acquisition turnover of £ 476,000). * Ongoing investment in business development combined with expected Q1 revenue unevenness produced a loss before interest, tax, depreciation, and amortisation ('EBITDA') of £1.4m (three months ended 31 December 1999: profit of £7,000). Loss before tax was £1.61 million (1999 - Loss of £0.12 million), after amortisation of goodwill and intangible assets of £0.4m. The goodwill arising on the acquisition of Computer Generation ('CompGen') amounts to £171.3m. * Eight new contract wins in Australia, Mexico, Jamaica, Holland, Germany, UK, Italy, and Switzerland. * Acquisition of CompGen transforms business with entry to US market and worldwide sales opportunities for convergent mediation product. * Acquisitions of CHA and i2i adds new US intercarrier product line and doubles presence and capability in Asia-Pacific region. * Strongest ever order book and prospect list gives of meeting Directors' expectations. For further information: Kevin Adams, CEO Intec Telecom Systems PLC +44 (0) 1483 745800 kevin.adams@intec-telecom-systems.com Andrew Rodaway Intec Telecom Systems PLC +44 (0) 7768 808082 andrew.rodaway@intec-telecom-systems.com Cubitt Consulting Fergus Wylie/Serra Balls +44 (0) 20 7367 5100 serra.konuralp@cubitt.com The company will be hosting a conference call to discuss the 1st quarter results on Monday, 19th February, 2001 at 10.30 GMT. The dial in number is: +44 (0)20 8240 8241 A taped recording will be available approximately 1 hour after the call ends for 48 hours. The dial in number is: +44 (0) 20 8288 4459 (Access code:636672) Chairman's and CEO's Statement Intec Telecom Systems PLC - 1st Quarter Results 2001 Overview In the first quarter of its 2001 year, Intec Telecom Systems continued to demonstrate the ability to generate excellent revenue growth. Increased investment in business expansion and typical Q1 sales lumpiness resulted in a loss-making quarter. With an order book and prospect list that is stronger than ever we continue to have confidence that both the core Intec business and our new acquisitions will deliver against future performance targets. Ten new orders already taken in the current period (Q2), for both our InterconnecT and Inter-mediatE product lines, underline that confidence. Operations and New Products On the operating front, we added 8 new companies to our customer base in Q1, including important wins in Australia, Mexico, Jamaica, Holland, Germany, the UK, Italy, and Switzerland. New contracts were won for all our major product lines, including InterconnecT, InterconnecT ITU and Inter-mediatE. Intec staff numbers at 31 December were 132 in the UK, and 135 based outside the UK, giving a total of 267, up from 242 at September 2000, with additions mainly in sales & support. This number grew by 110 on the acquisition of CompGen. With post-Q1 acquisitions, numbers now stand at over 450 people. We continue to invest in developing our core InterconnecT product family, both for current market requirements and for anticipated developments within the global communications business. The production of Version 7.0 remains on track for release in Q1 2002. We will be launching Maxi-routE, an important new internally-developed product at the GSM World conference in Cannes this week. A separate announcement on this product is being made today. Maxi-routE is a Least Cost Routing and Margin Analysis product which allows carriers to identify automatically from billing data the most cost effective routes for their interconnect traffic, to analyse route profitability, and to automate switch reconfiguration with minimal engineering effort. Maxi-routE will be installed at its first customer this month. We have several other products, including two resulting from technical synergies with CompGen mediation products, in the final stages of readiness for launch. In line with our accounting policy, all product development cost has been expensed. In the prospectus dated 23 November 2000 in relation to the acquisition of CompGen, we highlighted a number of key management objectives for the immediate future. These included merging acquired product lines, to grow the installed base to 85-90 sites, and building a strong US sales force. I am pleased to report that these objectives are going to be met. Our contracted InterconnecT installed base at the time of writing approaches 83 sites, and we have hired three capable business people from within the industry for senior sales and marketing positions in the US. On the product front, we have effectively integrated and rebranded the mediation products, including the creation of some new product opportunities from synergy between InterconnecT and Inter-mediatE. We are also actively developing a new generation of billing products, using certain technology and expertise acquired from i2i in Malaysia. Q1 Results In the three months to December 31 2000, revenues were £4.39 million, an increase of 66% on the same period in 1999. This figure includes revenues of £ 476,000 from Computer Generation, as the acquisition was concluded ten days before the end of the period. Revenues have been derived from new software licences (40% of turnover) for our market-leading InterconnecT and newly-acquired Inter-mediatE product families; from recurring revenues (39% of turnover) attributable to both upgrades within our volume-based pricing model and from support contracts (including our Application Service Provision (ASP) product); and from Professional Services (21% of turnover). With the growth in the company and the expansion of our cost base, it is always likely that we will make a loss in our less buoyant quarters, and this is the case in Q1, with a loss before interest, tax, depreciation and amortisation of £1.44 million, compared to a profit of £7,000 for the corresponding period in 1999. The increase in costs is primarily due to investment in business expansion, the revenue benefits of which will be seen in subsequent quarters. We have opened new offices in Mexico and the Middle-East and substantially expanded our offices in Brazil and Asia, as well as investing in sales, marketing and support in all our existing operations. The operating loss of £2.0m compares with a loss of £58,000 in the equivalent first quarter in the previous year. Analysis of results The gross margin on Intec's core business was 44%, some way below last year's margin of 58%, the margin decrease reflecting necessary increases in staffing levels in the implementation capability in Europe and Brazil which will be productive in future quarters. It was also impacted by cost of the Inter-mediate Prep products sold during the quarter. The gross margin for the 10 days of CompGen trading was 58%, giving an overall gross margin of 45%. Distribution costs have risen from £1.28 million in Q4 2000 to £1.87million in Q1, an increase of 46% reflecting the continuing expansion of Intec's distribution capabilities, with 16 new staff being added and increased expenditure in Marketing. Administration costs excluding depreciation have reduced slightly from £1.56 million in Q4 2000 to £1.53 resulting in small reduction between the quarters. The administration cost include, £0.1m of one-off costs associated with the recent acquisition activity and £0.08m for the 10 days of CompGen business. Depreciation and Goodwill amortisation charges have increased from £0.25 million in Q4 2000 to £0.58million in Q1 with £0.34 million of goodwill amortisation being charged in respect of the CompGen acquisition, the cost of which is being amortised over a period of fifteen years. At 31 December 2000 Intec's annualised debtor-days was 222 days, compared with 194 days at 30 September. Collections during December were slow because of the holiday season. However, as at 16 February we have made collections of £4.5 million, substantially reducing annualised debtor days to 116 days. Only 14% of the remaining debtor balance is outside current terms. There were no bad debts in the period. Acquisition progress During the quarter we concluded the acquisition of CompGen of Atlanta for $245 million. CompGen is a leader in convergent mediation, a field that we believe is pivotal in the future of telecoms OSS. Having a strong mediation product in our portfolio brings both excellent cross-selling and incremental sales opportunities, and we are already seeing the benefits of that in our expanded sales pipeline and current revenue stream. The immediate impact of this deal is to effectively double the size of the Group in terms of revenue, product line and customer base. The convergent mediation technology developed by CompGen, now renamed Inter-mediatE, is technically outstanding, and highly complementary to our own market-leading InterconnecT product. Inter-mediatE is a proven performer in customer sites alongside InterconnecT, and we now have the opportunity to sell a 'one-stop' solution for collecting, mediating, rating and billing all kinds of network traffic, including both switched and unswitched (IP) events. The combination also opens some incremental technical opportunities, by allowing us to create combined product offerings that are greater than the sum of the parts. We will release more details of these new products in the near future. We announced the acquisition of Inception to Implementation (' i2i'), a Malaysian competitor in November 2000, and this has been concluded after quarter end. i2i brings us close to critical mass in the Asia-Pacific region, with a doubling of our presence there. It also brings us substantial technical capability from within the former i2i staff, and we are already leveraging that strength in our new product development. We closed our acquisition of CHA Systems of Dallas on the 1 February 2001. CHA has a technically advanced Carrier Access Billing System (CABS) for the US intercarrier market, which complements our existing InterconnecT and InterconnecT ITU offerings for the non-US and international markets. We can now offer a complete convergent mediation and intercarrier billing solution in all world markets. These acquisitions were funded from existing cash resources and from a placing and open offer to raise approximately £180 million, before expenses. The integration of the mediation business is moving ahead successfully, particularly with the recent recruitment of the former head of ICL's telecoms division, Gary Bunney, to spearhead the whole American operation. Gary's experience of both our key billing and mediation markets will be particularly valuable in developing the strong synergies between the businesses and product offerings into revenue growth. We have already completed a very successful trade show in the US under the Intec brand and recruitment to increase our US sales and marketing team is moving towards completion. Outlook A great deal is being said about the slowdown in capital expenditure in the global telecoms industry, as concerns grow over levels of indebtedness and future revenue streams. While it is widely recognised that major capital expenditure plans will be under greater scrutiny, we believe that investments in technology that supports revenue assurance and operational efficiency will continue to be made. Indeed, our pipeline of new business prospects has never been stronger, and we have clear evidence of growing interest in our solutions. In the seven weeks since the end of the quarter, we have signed 10 new customers, and we are confident that the OSS sector will demonstrate continuing strength as the telecoms industry focuses on revenue generation from its network investment. We see challenges ahead for some weaker or less focused competitors in the OSS market, but we are optimistic that Intec will benefit from customers seeking vendors with a solid financial position and proven, high-performance products and support services. Finally I would like to thank the Company's staff and Directors, and our advisers, for their contributions to our success, and for their hard work in an exceptionally busy period. Mike Frayne, Executive Chairman & Kevin Adams, CEO. Commenting on the results, Kevin Adams, Chief Executive Officer said: 'I am pleased that we have been able to sustain strong revenue growth over the previous equivalent first quarter of our 2001 year. The new business coming in after quarter end also indicates that the market for OSS solutions that can deliver real financial benefits to carriers is as strong as ever, for both mediation and intercarrier billing, and we look forward with confidence. 'On the operational side, it is important to note that we are continuing to develop all our product lines vigorously, with the aim of sustaining the technical leadership that we have already established. We have a number of new products ready to launch, including Maxi-routE this week in Cannes, and these will serve to consolidate our position as an innovator in the OSS market. 'Successful integration of our new acquisitions is now our number one priority, and I am happy to report that this is going very well, with sales, support, training, marketing and partnering initiatives all underway. The opportunities for the enlarged group are excellent, and the logic of these deals has already been proven by current trading. These are exciting times for Intec, and I believe the opportunities we have will rapidly feed through into enhanced shareholder value.' Results for the Three months ended 31 December 2000 FINANCIAL Unaudited Unaudited Audited HIGHLIGHTS Quarter Quarter Year ended ended Ended 31 31 30 December December September Notes 2000 1999 2000 £000 £000 £000 TURNOVER 4,388 2,643 20,279 EBITDA before exceptional flotation costs (1,419) 7 4,520 Operating (i) (loss)/profit (2,017) (58) 3,313 Adjusted (loss) / profit before Tax (1,611) (120) 4,416 (Loss)/earnings per share - basic (0.81) p - p 2.17 p - diluted (ii) (0.81) p - p 2.16 p Adjusted (loss)/ earnings per share (iii) (0.84) p - p 2.67 p Notes to the Financial Highlights (i) Group operating (loss)/profit (1,997) (58) 3,160 - Share of operating (loss)/profit of associate (20) - 153 Operating (loss)/profit (2,017) (58) 3,313 (ii) (Loss)/profit on ordinary activities before taxation (1,611) (120) 3,837 - Amortisation of goodwill and other intangible assets 393 - Exceptional flotation costs - - 579 Adjusted (loss)/profit before tax (1,218) (120) 4,416 (iii) Adjusted (loss)/earnings per share calculation based on the following adjusted (loss)/earnings after tax - (Loss)/earnings after tax (1,664) (120) 2,880 - Amortisation of goodwill and other intangible assets 393 - 100 - Exceptional flotation costs - - 579 - Tax effect on exceptional flotation costs - - (23) Adjusted (loss)/earnings after tax (1,271) (120) 3,536 KEY CUSTOMER DATA - Independent Technology Systems Limited only Period Ended: 3 months ended 31 12 months ended 30 3 months ended 31 December 1999 September 2000 December 2000 Cumulative: Contracted customer 42 56 61 base Contracted installations InterconnecT 44 62 66 InterconnecT ITU 4 7 8 InterconnecT ASP 4 4 4 InterconnecT PREP 3 Total 52 73 81 Consolidated profit and loss account Unaudited Unaudited Audited 31 31 30 December December September Note 2000 1999 2000 £000 £000 £000 TURNOVER Continuing 3,912 2,643 19,988 operations Acquisitions 476 - 291 Total 2 4,388 2,643 20,279 turnover Development expenditure (532) (482) (2,013) Other cost of sales (1,874) (951) (6,514) Total cost of sales (2,406) (1,433) (8,527) GROSS PROFIT 1,982 1,210 11,752 Distribution (1,872) (936) (4,274) costs Administrative expenses - Amortisation of goodwill and (393) - (100) other intangible assets - Exceptional - - (579) flotation costs - Other administrative (1,714) (332) (3,739) expenses Total (2,107) (332) (4,318) administrative expenses OPERATING (LOSS) / PROFIT Continuing (1,818) (58) 3,441 operations Acquisitions (179) - (281) GROUP OPERATING (LOSS)/ (1,997) (58) 3,160 PROFIT Share of operating (20) - 153 (loss)/profit in associate Interest receivable and 420 2 642 similar income Interest payable and (14) (64) (118) similar charges: (LOSS)/PROFIT ON (1,611) (120) 3,837 ORDINARY ACTIVITIES BEFORE TAXATION Tax charge on (loss)/profit on (53) - (957) ordinary activities RETAINED (LOSS)/PROFIT ON ORDINARY ACTIVITIES AFTER (1,664) (120) 2,880 TAXATION (Loss) / earnings per 3 (1.10) p - p 2.17 p share - basic (Loss) / earnings per 3 (0.81) p - p 2.67 p share - adjusted (Loss) /earnings per 3 (0.81) p - p 2.16 P share - diluted (Loss)/ profit for (1,664) (120) 2,880 the period Exchange translation differences arising on foreign currency net 77 - 17 investments Total recognised gains and (1,587) (120) 2,897 losses during the period Consolidated balance sheet Unaudited Unaudited Audited 31 December 31 30 September December 2000 1999 2000 £000 £000 £000 FIXED ASSETS Intangible 172,337 - 1,863 assets Tangible 2,254 756 1,692 assets Investments 645 - 665 175,236 756 4,220 CURRENT ASSETS Stocks 91 - - Debtors 18,450 4,358 13,794 Investments 24,325 - 18,970 Cash at bank 9,063 196 12,495 and in hand 51,929 4,554 45,259 CREDITORS: falling due within one year (7,382) (1,952) (5,827) NET CURRENT 44,547 2,602 39,432 ASSETS ASSETS LESS CURRENT 219,783 3,358 43,652 LIABILITIES CREDITORS: falling due after more than one year (125) (3,570) (125) DEFERRED (4,833) (1,273) (1,977) INCOME TOTAL NET 214,825 (1,485) 41,550 ASSETS / (LIABILITIES ) CAPITAL AND 214,825 (1,485) 41,550 RESERVES Reconciliation Unaudited Unaudited Audited of movements in consolidated 30 December 30 30 September shareholders' December Funds 2000 1999 2000 £'000 £'000 £'000 (Loss)/profit for the financial (1,664) (120) 2,880 period Other recognised gains and 77 - 17 losses relating to the period Issue of share capital net of 174,862 - 40,018 associated expenses Increase / (decrease) in 173,275 (120) 42,915 shareholders' funds Opening shareholders' funds/ 41,550 (1,365) (1,365) (deficit) Closing shareholders' funds/ 214,825 (1,485) 41,550 (deficit) Consolidated cash flow statement Unaudited Unaudited Notes 31 31 30 December December September 2000 1999 2000 £000 £000 £000 Net cash (outflow) / inflow from operating Activities (i) (4,048) 260 (4,889) Returns on investments and servicing of finance Interest received 420 2 628 Interest element of finance lease rental (3) (5) (19) payments Interest paid - (59) (120) 417 (62) 489 Taxation Overseas taxation paid - - (53) - - (53) Capital investment Payments to acquire tangible fixed assets (277) (53) (1,458) Payment to acquire Intellectual Property - - (1,872) Rights Proceeds on disposal of fixed assets - - 25 (277) (53) (3,305) Acquisitions Investment in associated undertakings - - (5) Investment in subsidiary (170,496) - (5) Costs of acquisition (825) - - Net cash acquired in subsidiary 2,319 - 14 (169,002) - 4 Cash (outflow) / inflow before management of liquid resources and financing (172,910) 145 (7,754) Use of liquid resources Increase in term deposits (5,355) - (18,291) Escrow account - - (679) Financing Issue of ordinary share capital 180,021 - 43,090 Share issue costs charged to the share (5,159) - (3,839) premium account Capital element of finance lease rental (29) (28) (111) payments (Decrease) / increase in cash in the (ii), (3,432) 117 12,416 period (iii) Notes to the consolidated cash flow statement Unaudited Unaudited Audited 31 December 31 December 30 September 2000 1999 2000 £000 £000 £000 (i) Reconciliation of operating (loss) / profit to net cash (outflow) / inflow from operating activities Operating (loss) / profit (1,997) (58) 3,160 Shares gifted to employees 214 - - Depreciation 186 65 528 Amortisation of goodwill and other 393 - 100 intangible assets Profit on disposal of fixed assets - - (1) Decrease in stocks 17 - - Decrease / (increase) in debtors 18 (252) (9,475) (Decrease) / increase in creditors (2,665) 505 585 Net cash (outflow)/inflow from operating (4,048) 260 (4,889) activities (ii) Reconciliation of net cash flow to movement in net (debt) / funds (Decrease) / increase in cash in the (3,432) 117 12,416 period Cash outflow from decrease in lease 29 28 111 financing Cash outflow from increase in term 5,355 - 18,970 deposits resources Change in net funds / (debt) resulting from cash flows 1,952 145 31,497 Amounts owed to former parent company - 27 3,382 Movement in net funds 1,952 172 34,879 Net funds / (debt) at 1 October 1999/2000 31,221 (3,546) (3,658) Net funds / (debt) at 31 December 33,173 (3,374) 31,221 Audited Unaudited 30 September Cash Flow 31 December 2000 2000 £000 £000 £000 (iii) Analysis of movement in net funds/ (debt) Cash in hand and at bank 12,495 (3432) 9,063 Finance leases (244) 29 (215) Term Deposits 18,970 5,355 24,325 Total 31,221 1,952 33,173 NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION 1. Basis of Preparation The interim financial information of Intec Telecom Systems PLC for the three months ended 31 December 2000 has been prepared in accordance with the accounting policies set out in, and is consistent with, the audited final statements of Intec Telecom Systems PLC for the year ended 30 September 2000 except that the taxation charge for the period is based on the estimated charge for the year ending 30 September 2001. The interim financial information is neither audited nor reviewed and does not comprise statutory accounts for purposes of Section 240 of the Companies Act 1985. The abridged information for the year ended 30 September 2000 has been extracted from the statutory financial statements of Intec Telecom Systems PLC for that year which have been filed with the Registrar of Companies. The Auditors report on those accounts was unqualified and did not contain a statement under Section 237(2) or 237(3) of the Companies Act 1985. 2. Turnover and segmental reporting Unaudited Unaudited Audited 30 December 30 30September December 2000 1999 2000 £000 £000 £000 By Origin : Turnover United Kingdom 3,849 2,643 19,977 Continental Europe 63 - 288 Asia -Pacific - - 14 North America 476 - - South America - - - 4,388 2,643 20,279 By origin : (Loss)/profit before tax United Kingdom (312) (120) 4,541 Continental Europe (497) - (276) Asia -Pacific (394) - (428) North America (169) - - South America (292) - - (1,664) (120) 3,837 By origin : Net assets/(liabilities) United Kingdom 215,099 (1,273) 41,638 Continental Europe (330) - (121) Asia -Pacific (344) - 33 North America 644 - - South America (244) - - 214,825 (1,273) 41,550 2. Turnover and segmental reporting (continued) Unaudited Unaudited Audited 30 December 30 December 30 September 2000 1999 2000 £000 £000 £000 Turnover by activity Licence Sales 1,640 1,138 11,413 Recurring income: ASP Service 158 16 138 Volume upgrade licences 568 258 1,934 Support and maintenance fees 1,002 480 2,397 Professional services income: Implementation and migrations 749 587 3,374 Consulting and training income 191 164 1,023 Hardware 80 - - Total Turnover 4,388 2,643 20,279 Turnover by destination United Kingdom 903 587 2,319 Continental Europe 1,462 1,032 8,731 Eastern Europe 564 383 3,516 Africa 113 128 1,411 Asia Pacific 569 314 2,384 North America 350 17 73 South America 427 182 1,845 Total Turnover 4,388 2,643 20,279 3. (Loss)/earnings per share Basic (loss) / earnings per share is based on the weighted average number of shares in issue of 151,045,075 (1999:125,142,692) and a loss on ordinary activities after taxation of £1,664,000 (1999: December - Loss of £ 120,000). Adjusted (loss)/earnings per share is based on the weighted average number of shares in issue of 151,045,075 (1999:125,142,692) and adjusted earnings after tax of £1,271,000 (1999: December - Loss of £120,000) which exclude the amortisation of goodwill and other intangible assets of £393,000. Diluted earnings per share is based on a weighted average number of shares in issue, as adjusted by the dilutive effect of share options, of 151,045,075 (1999: 125,142,692 ). Note 4 (i) Acquisitions On 21st December 2000 the group acquired Computer Generation Incorporation for a consideration of £170.5million plus the financing and legal costs of acquisition of £825,000. Goodwill arising on the acquisition of Computer Generation Incorporation has been disclosed as an intangible asset and will be amortised over 15 years. Analysis of the acquisition of Computer Generation Inc. :- Net Assets at date of Provisional acquisition and provisional fair value Alignment of Fair Book accounting Value Value policies to group £000 £000 £000 Tangible fixed assets 471 - 471 Stocks 108 - 108 Debtors 4,676 - 4,676 Cash 2,319 - 2,319 Deferred taxation 35,514 (35,514) - Creditors due within one year (7,120) - (7,120) 35,968 (35,514) 454 Goodwill arising on 170,867 acquisition 171,321 Cash Consideration 170,496 Costs of the 825 acquisition 171,321 Note 4 (ii) The acquisition of CHA was completed on 1 February 2001, the consideration comprising US$9.6m (£6.5m) in cash and the issue of 1,336,173 new ordinary shares in the capital of Intec (£4.8m). In addition, deferred consideration with a value up to $14.4m (approx. £9.8m) may be payable, calculated by reference to CHA's gross revenue and EBIT targets for the calendar year ending 31 December 2001. Any deferred consideration payable will be in the ratio 55 per cent. cash and 45 per cent. in shares. Note 4 (iii) The acquisition of i2i was completed on 14 February 2001, the consideration comprising US$12.5m (£8.6m) in cash and the issue of 1,983,274 new ordinary shares in the capital of Intec (£9.1m). A further US$7.5m of Intec shares may be issued by way of deferred consideration over the next two years, based on specific criteria related to the winning of existing i2i business prospects.

Companies

Intec Telecom Systems (ITL)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today