3rd Quarter Results

Intec Telecom Systems PLC 23 August 2005 Intec Telecom Systems PLC Unaudited results for the nine months ended 30 June 2005 Multi-million pound contract wins and acquired Singl.eView business drive revenue up 63%; earnings increased substantially with EBITDA up 55% London, 23 August 2005 ... Intec Telecom Systems PLC ("Intec" or "the Company"), a leading supplier of business and operations support systems (BSS/OSS) to the global telecoms industry, today announced its unaudited results for the nine months ended 30 June 2005 ("9m 2005"). Revenue and earnings, in line with market expectations, are substantially ahead of the same period last year, as a result of both the Singl.eView acquisition in August 2004 and a growing contribution from large, multi-product transactions. Continuing investment in product development, distribution channels and Intec's professional services capability, backed by strong cost management, has maintained sales momentum and delivery capability. Recent multi-million pound contract wins, with high activity levels in new business development, underline the continuing strength of the enlarged business. Financial Highlights • Revenue up 63% to £76.5m (9 months ended 30 June 2004 ("9m 2004"): £46.9m). • EBITDA before exceptionals up 55% to £8.5m (9m 2004: £5.5m). • Services revenue up 121% to £30.4m (9m 2004: £13.8m). • Adjusted PBT up 52% to £5.8m (9m 2004: £3.8m). • Adjusted EPS up 12% to 1.61p (9m 2004: 1.44p). • Loss before tax of (£7.7m) (9m 2004: (£2.2m)) after £12.3m amortisation charge (9m 2004: £6.0m). • Operating cash inflow of £3.8m (9m 2004: inflow of £0.1m). • Net cash & equivalents of £28.4m (30-Jun-04: £12.8m). Operational Highlights • Increase in volume of multi-product and multi-million pound contracts. • Notable competitive wins including VimpelCom, The Carphone Warehouse and a major US operator. • Increase in customer base to 715 installations within almost 500 customers (30-Jun-04: 585 installations with 409 companies). • Continuing investment helps Intec retain technical leadership in core product areas. • New technical facility opened in Bangalore, India. "Intec's staff and management team continues to execute very satisfactorily against its business goals, within a global marketplace that remains highly competitive," said Intec's non-executive Chairman, John Hughes. "The Singl.eView acquisition, which was completed last year, has proved to be the transformational transaction that was expected. We have successfully turned around the business, and it continues to go from strength to strength. The associated evolution to a primarily Percentage of Completion revenue recognition model is being well managed. The Company, its staff and products are well positioned to maximise the growth opportunities that lie ahead." "The multi-product, multi-million pound contract wins we are achieving, and our growing participation in leading-edge projects, indicate the continuing momentum and potential of the business," added Intec CEO, Kevin Adams. "Intec has an unmatched product range, a substantial and proven global delivery capability, and a broad customer base. These are vital assets in our quest for continued growth in the OSS/BSS market." - e n d s - Notes: • A conference call for analysts will be held at 2.00pm on Tuesday 23 August 2005. Please contact Financial Dynamics for details. • Digital images of the Intec executive directors can be downloaded from www.vismedia.co.uk. • These are the last full Q3 results issued by Intec. From next financial year, as a result of new regulations affecting London listed companies, the Company will issue half and full year results only. • Investor website can be found at www.intecbilling.com For more information, please contact: Kevin Adams, Chief Executive Officer, Intec Telecom Systems PLC Tel: +44 (0)1483 745800 Robert Gibb, Investor Relations Manager, Intec Telecom Systems PLC Tel: +44 (0)1483 745941 or 745800; Mob: +44 (0)7876 656 896 Email: robert.gibb@intecbilling.com James Melville-Ross/ Edward Bridges/ Cass Helstrip Financial Dynamics Tel: +44 (0)20 7831 3113; Email: intec@fd.com Chairman's and CEO's Statement Intec Telecom Systems PLC - Third Quarter, 2005 Overview We are pleased to report considerably increased revenues for the first nine months of 2005 ("9m 2005"), as a result of the successful acquisition and integration of the Singl.eView business, and our ability to close new deals across our broad product portfolio. Earnings have also risen strongly, indicating our ability to control expenditure well during a period of rapid expansion and development. With the addition of Singl.eView to our world-class software, solutions and services portfolio, the Company is well placed to benefit from new opportunities in the telecoms billing market. Intec is now the world's third largest supplier of business and operations support systems (BSS/OSS) (source: ABN AMRO) based on licence sales, and the largest such supplier in EMEA. The Intec business model continues to mature, due to a number of factors, including a greater contribution from services; larger and longer contracts; and a revenue recognition model biased increasingly towards a Percentage of Completion (PoC) basis. While the immediate effect may be a lower revenue recognition run-rate, the welcome longer term benefit is a more stable and predictable business model. Operational review In the third quarter of 2005 ("Q3 2005"), Intec secured several important contract wins. A multi-million dollar agreement for Singl.eView was announced in April with a tier 1 US carrier, to manage the billing of its next-generation services and reporting across its legacy billing platforms for strategic business customers. This contract highlights a growing trend for operators to consolidate multiple operational and billing systems to reduce costs and increase customer service efficiencies. Singl.eView's convergent technology is a very good fit for such projects. Other multi-million pound contracts announced in the period included an agreement for Singl.eView with The Carphone Warehouse, Europe's leading independent mobile communications retailer; and VimpelCom, a leading provider in Russia and Kazakhstan, for state of the art online and offline mediation across its mobile network. This deployment will ultimately support one of the world's largest mobile subscriber bases. Intec remains strong in developing markets such as Africa. For example, in Nigeria, where we are a dominant player in inter-carrier billing, a contract was signed in April with Interconnect Clearinghouse Nigeria, which acts as a clearing house for all telecommunications service providers in the country. The clearing system handles inter-carrier billing between different organisations, ensuring improved call completion rates and increased revenue for operators. Several new installations successfully went live. Telecom New Zealand went into production with a new prepaid mobile billing system based on Singl.eView and Inter-mediatE. Bridge Mobile, an alliance encompassing eight leading Asia Pacific mobile operators, with a combined subscriber base of 64 million, chose InterconnecT v7 for a project, developed in partnership with LogicaCMG, that will facilitate a regional mobile infrastructure and common service platform for pre-paid subscribers. Major initiatives have been launched internally that are focused on increased efficiency in services delivery and increased level of standard functionality to minimise customisation requirements. A newly opened technical facility in Bangalore, India is a part of this process. Intec has already recruited almost 100 people, and this number is planned to reach 150 by the end of the year and to double again in 2006. The majority of employees are technical staff and software developers, supported by a small administration team. Products As a result of our continuing commitment to product development, important new modules and functionality were released and significant programme milestones achieved. For example, InterconnecT Content Partner Management, which allows users to maximise the revenue potential of content-based services such as on-line gaming and e- and m-commerce offering, was released and implemented in a major tier 1 customer in the US. Similarly, the latest version of our Singl.eView Customer Management product, an integrated CRM system which enables an operator to capture information about their customers and efficiently manage the data, was released and successfully incorporated into several customer installations across Europe. InterconnecT v7, the latest version of Intec's market leading inter-carrier billing system, was selected by four new customers in the quarter and went into production in Singapore. The solution was benchmarked with more than 1.6 billion event data records (EDRs) processed correctly in an eight-hour test. This is several times the current processing requirement of even the world's largest carriers today. (An EDR can represent anything from a standard voice call to the delivery of a sophisticated content-based event.) We also developed additional functionality within our Optimal Routing (OR) trading platform solution, which now consists of nine modules enabling operators to route network traffic in the most cost effective way whilst achieving the appropriate quality of service standards Staff and infrastructure At the end of Q3 2005, staff numbers globally stood at 1,505 (30-Jun-04: 713) with 29 offices in 23 countries. Intec's global presence is important for a number of reasons. By being located close to customers, Intec can provide strong support backed by an understanding of local circumstances and market opportunities, giving rise to potential for cross-selling and up-selling from the extended Intec product portfolio. Regional Headquarters are located in Woking, UK (Europe, Middle East & Africa (EMEA)); Atlanta, USA (North America & Canada); Sao Paulo, Brazil (Caribbean & Latin America (CALA)); and Kuala Lumpur, Malaysia (Asia Pacific). Additionally, and operating globally, the Company has development centres in Cape Town, South Africa; Brisbane, Australia; Roskilde, Denmark; and Bangalore, India. Financial analysis Total revenue increased by 63 per cent to £76.5 million (9m 2004: £46.9m) primarily reflecting an increase due to Singl.eView, the retail billing business acquired in Q4 2004. As a result of this acquisition, as discussed at the half year results, several important aspects of Intec's financial profile have changed. Firstly, revenue recognition has evolved largely from 'milestones achieved' to be primarily oriented to a Percentage of Completion (PoC) basis. As a result, less income is recognised in the early stages of a contract period than previously. Secondly, multi-million pound, multi-product contracts are being achieved regularly, a trend that is expected to continue. Thirdly, customers often request further software and services to be included in a contract once the benefits are seen, yielding additional revenue and income to Intec. However, this can extend the agreement period, lengthening the PoC time and therefore reducing revenue recognised within a given quarter. The combined effects of these changes mean that average contract sizes have increased and carried forward revenues for future periods are greater. In addition to these revenue recognition changes, Singl.eView generates greater services business than was the case with the traditional Intec operating model. Services revenue rose 121 per cent to £30.4 million (9m 2004: £13.8 million) despite the exclusion of some non-recurring items such as hardware contracts. Implementation and consulting alone increased by 154 per cent. Services now account for 40 per cent of revenue compared with 29 per cent previously. Recurring revenues, which includes maintenance fees and licence upgrades, grew by 52 per cent to £32.5 million (9m 2004: £21.3 million). Licence sales increased by 15 per cent to £13.6 million (9m 2004: £11.8 million). Asia Pacific had a particularly strong period, with its revenue rising 107 per cent to £11.5 million (9m 2004: £5.6 million), as a result of both acquired Singl.eView business and several key wins. Revenue also increased in North America & Canada by 72 per cent to £24.0 million (9m 2004: £14.0 million) and in EMEA by 66 per cent to £36.2 million (9m 2004: 21.9 million), including a 119 per cent increase from Continental Europe within the latter region. Turnover in CALA fell 14 per cent to £4.8 million (9m 2004: £5.5 million) reflecting the strong year it had in 2004, and the absence of any newly acquired Singl.eView business in this region. EBITDA before exceptionals rose 55 per cent to £8.5 million (9m 2004: £5.5 million); EBITA was up 41 per cent to £5.2 million (9m 2004: £3.7 million) and adjusted profit before tax increased 53 per cent to £5.8 million (9m 2004: £3.8 million). The loss before tax of (£7.7 million) (9m 2004: loss of (£2.2 million)) reflects the increased goodwill amortisation charge of £12.3 million (9m 2004: £6.0 million) following the Singl.eView acquisition. Gross margin for the nine months was 63 per cent (9m 2004: 71 per cent), reflecting the change to a higher proportion of professional services over licence fees consequent on major implementation projects. Intec has a number of internal programmes aimed at delivering higher gross margin over time. Adjusted earning per share rose 12 per cent to 1.61p (9m 2004: 1.44p) and basic loss per share was (2.88p) (9m 2004: (1.45p)). Quarterly reporting Following new legislation in July 2005, affecting all companies listed on the London Stock Exchange, Intec is no longer obliged to report quarterly. As a result, these Q3 results will be the last ones issued in this format. From next financial year we will announce half and full year results only, including full reports and financial statements to all shareholders. This change also signals the evolution of Intec into a larger, more mature and stable company and six monthly reporting periods will reflect, more appropriately, the longer sales cycles in our business. Outlook Intec is winning substantial, multi-product deals with major customers around the world, and we are investing in the staff, capabilities and infrastructure needed to continue growing the business. The transformation of the Singl.eView business into a profitable operation has been successfully achieved, and we look forward to sustained success in both this and the core Intec business. Although the final quarter of the year has a substantial revenue and earnings target, provided market conditions remain stable, our current revenue visibility and order pipeline allow us to be confident of meeting expectations for the full year. In addition, the success we are experiencing in 2005 provides a solid foundation for future growth in the business. John Hughes, Non-executive Chairman Kevin Adams, Chief Executive Officer 22 August 2005 Intec Telecom Systems PLC Unaudited results for the nine months ended 30 June 2005 FINANCIAL HIGHLIGHTS Nine months ended 30 June 2005 Unaudited Unaudited Nine months Nine months Audited ended ended Year ended Note 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 TURNOVER 76,464 46,921 68,828 Adjusted profit before tax (i) 5,762 3,786 8,277 EBITDA before exceptional items (ii) 8,465 5,485 10,667 FRS 3 Operating loss (8,260) (2,317) (1,369) Basic loss per share (2.88) p (1.45) p (0.80) p Adjusted earnings per share (iii) 1.61 p 1.44 p 3.57 p Notes to the Financial Highlights: Unaudited Unaudited Nine months Nine months Audited ended ended Year ended 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 (i) Loss before tax (7,719) (2,214) (1,187) Amortisation of goodwill and other intangibles 12,270 6,000 8,762 Exceptional items 1,211 - 702 Adjusted profit before tax 5,762 3,786 8,277 (ii) Adjusted profit before tax 5,762 3,786 8,277 Net interest income (541) (103) (182) Depreciation 3,244 1,801 2,572 EBITDA before exceptional items 8,465 5,485 10,667 (iii) Adjusted earnings per share calculation based on the following adjusted earnings after tax: Loss after tax (8,646) (3,009) (1,737) Amortisation of goodwill and other intangible assets 12,270 6,000 8,762 Exceptional items 1,211 - 702 Adjusted earnings after tax 4,835 2,991 7,727 KEY CUSTOMER DATA 30 June 30 September 30 June 2005 2004 2004 Number Number Number Cumulative: Contracted customer base 490 465 409 Contracted customers from acquisitions 5 - - 495 465 409 Contracted installations 708 668 585 Contracted installations from acquisitions 7 - - 715 668 585 CONSOLIDATED PROFIT AND LOSS ACCOUNT Nine months ended 30 June 2005 Unaudited Unaudited Nine months Nine months Audited ended ended Year ended Note 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 TURNOVER 2 76,464 46,921 68,828 Cost of sales (28,590) (13,534) (19,550) GROSS PROFIT 47,874 33,387 49,278 Distribution costs (13,457) (8,659) (13,068) Administrative expenses: Development expenditure (11,634) (8,855) (11,494) Amortisation of goodwill and other intangible assets (12,270) (6,000) (8,762) Exceptional expenses (1,211) - (702) Other administrative expenses (17,562) (12,190) (16,621) Total administrative expenses (42,677) (27,045) (37,579) GROUP OPERATING LOSS (8,260) (2,317) (1,369) Interest receivable and similar income 671 166 287 Interest payable and similar charges (130) (63) (105) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (7,719) (2,214) (1,187) Tax charge on loss on ordinary activities 3 (927) (795) (550) RETAINED LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (8,646) (3,009) (1,737) Loss per share - basic 4 (2.88) p (1.45) p (0.80) p Earnings per share - adjusted 4 1.61 p 1.44 p 3.57 p CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Nine months ended 30 June 2005 Unaudited Unaudited Nine months Nine months Audited ended ended Year ended 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 Loss for the period (8,646) (3,009) (1,737) Exchange translation differences arising on foreign currency net investments 45 (786) (868) Total recognised losses during the period (8,601) (3,795) (2,605) CONSOLIDATED BALANCE SHEET 30 June 2005 Unaudited Unaudited Nine months Nine months Audited ended ended Year ended Note 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 FIXED ASSETS Intangible assets 92,765 63,110 103,459 Tangible assets 8,004 3,943 7,530 Investments 5 5 6 100,774 67,058 110,995 CURRENT ASSETS Debtors 5 44,108 26,848 40,634 Investments 4,573 5,352 3,966 Cash at bank and in hand 26,197 7,565 28,216 74,878 39,765 72,816 CREDITORS: amounts falling due within one year 6 (7,297) (7,049) (8,962) NET CURRENT ASSETS 67,581 32,716 63,854 TOTAL ASSETS LESS CURRENT LIABILITIES 168,355 99,774 174,849 CREDITORS: amounts falling due after more than one year 7 (2,748) (85) (2,817) PROVISIONS FOR LIABILITIES AND CHARGES 8 (3,028) (2,248) (3,403) ACCRUALS AND DEFERRED INCOME 9 (28,649) (11,379) (26,399) TOTAL NET ASSETS 133,930 86,062 142,230 CAPITAL AND RESERVES Called up share capital 10 3,017 2,078 2,998 Share premium account 10 160,744 106,405 160,462 Merger reserve 10 6,768 6,768 6,768 Own shares 10 (95) (96) (95) Foreign exchange reserve 10 (1,809) (1,772) (1,854) Profit and loss account 10 (34,695) (27,321) (26,049) EQUITY SHAREHOLDERS' FUNDS 133,930 86,062 142,230 RECONCILIATION OF MOVEMENT IN CONSOLIDATED SHAREHOLDERS' FUNDS Nine months ended 30 June 2005 Unaudited Unaudited Nine months Nine months Audited ended ended Year ended 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 Loss for the financial period (8,646) (3,009) (1,737) Other recognised losses relating to the period 45 (786) (868) Issue of share capital net of associated expenses 301 681 55,316 Decrease in contingent consideration - (236) (236) Increase in own shares - (342) - (Decrease)/increase in shareholders' funds (8,300) (3,692) 52,475 Opening shareholders' funds 142,230 89,754 89,755 Closing shareholders' funds 133,930 86,062 142,230 CONSOLIDATED CASH FLOW STATEMENT Nine months ended 30 June 2005 Unaudited Unaudited Nine months Nine months Audited ended ended Year ended 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 Net cash inflow/(outflow) from operating activities (i) 3,769 144 4,595 Returns on investments and servicing of finance Interest received 671 166 288 Interest element of finance lease rental payments (6) (21) (83) Interest paid and similar items (85) (42) (23) 580 103 182 Taxation Overseas taxation paid (915) (592) (1,123) Capital investment Payments to acquire tangible fixed assets (3,748) (1,463) (2,367) Proceeds on disposal of fixed assets 55 - - (3,693) (1,463) (2,367) Acquisitions Investment in subsidiaries (929) (107) (42,567) Net cash acquired with subsidiaries 75 - 1,354 (854) (107) (41,213) Cash inflow/(outflow) before management of liquid resources and financing (1,113) (1,915) (39,926) Use of liquid resources Decrease in cash investments/term deposits (567) 282 1,652 Financing Issue of ordinary share capital 301 106 56,840 Share issues costs charged to the share premium account - (5) (1,760) Loan - - 2,223 Capital element of finance lease rental payments (114) - (152) Increase in cash in the period (ii),(iii) (1,493) (1,637) 18,877 NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT Nine months ended 30 June 2005 Unaudited Unaudited Nine months Nine months Audited ended ended Year ended 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 (i) Reconciliation of operating loss to net cash inflow/(outflow) from operating activities Operating loss (8,260) (2,317) (1,369) Depreciation 3,244 1,801 2,572 Amortisation of goodwill and other intangible assets 12,270 6,000 8,762 (Gain)/loss on disposal of fixed assets (11) 6 45 (Increase)/decrease in stock - 1 - Decrease in debtors (1,583) (5,532) (6,300) (Increase)/decrease in creditors (1,891) 185 885 Net cash inflow/(outflow) from operating activities 3,769 144 4,595 (ii) Reconciliation of net cash flow to movement in net funds Increase/(decrease) in cash in the period (1,493) (1,637) 18,877 Net cash outflow/(inflow) from decrease/(increase) in debt and lease financing 114 105 (2,071) Net cash inflow from decrease in liquid resources 567 (282) (1,652) Change in net funds resulting from cash flows (812) (1,814) 15,154 New finance leases - - (201) Translation differences (486) (499) (383) Movement in net funds (1,298) (2,313) 14,570 Net funds at 1 October 29,700 15,130 15,130 Net funds at 30 June / 30 September 28,402 12,817 29,700 (iii) Analysis of movement in net funds Audited Unaudited 1 October Exchange 30 June 2004 Cash flow movement 2005 £000 £000 £000 £000 Cash in hand and at bank 28,216 (1,493) (526) 26,197 Debt due after one year (2,223) - - (2,223) Finance leases (259) 114 - (145) Term deposits 3,966 567 40 4,573 29,700 (812) (486) 28,402 NOTES TO THE UNAUDITED INTERIM FINANCIAL INFORMATION Nine months ended 30 June 2005 1. BASIS OF PREPARATION The interim financial information has been prepared in accordance with accounting policies set out in, and consistent with, the Group's 2004 financial statements except for the taxation charge for the period which is based on the estimated charge for the year ending 30 September 2005. The interim financial information is neither reviewed nor audited and does not comprise statutory accounts for the purposes of Section 240 of the Companies Act 1985. The abridged information for the year ended 30 September 2004 has been extracted from the Group's statutory accounts for that period, which have been filed with the Registrar of Companies following the 2005 Annual General Meeting. The Auditor's report on the statutory accounts of the Group for that period was unqualified and did not contain a Statement under either Section 237(2) or Section 237(3) of the Companies Act 1985. The interim financial information was approved by the Board of Directors on 22 August 2005. 2. TURNOVER AND SEGMENTAL REPORTING Turnover by origin Unaudited Unaudited Nine months ended 30 June 2005 Nine months ended 30 June 2004 Inter- Inter- Total segment External Total segment External turnover turnover turnover turnover turnover turnover £000 £000 £000 £000 £000 £000 United Kingdom 17,801 (19) 17,782 22,315 (322) 21,993 Continental Europe 21,230 (2,400) 18,830 3,267 - 3,267 Africa 2,214 - 2,214 131 - 131 Asia-Pacific 6,039 - 6,039 1,519 - 1,519 North America and Canada 31,644 (2,245) 29,399 20,195 (1,658) 18,537 Central and Latin America 2,200 - 2,200 1,474 - 1,474 81,128 (4,664) 76,464 48,901 (1,980) 46,921 Audited Year ended 30 September 2004 Inter- Total segment External Turnover turnover turnover £000 £000 £000 United Kingdom 32,670 (1,849) 30,821 Continental Europe 5,889 - 5,889 Africa 266 - 266 Asia-Pacific 2,126 - 2,126 North America and Canada 29,600 (1,964) 27,636 Central and Latin America 2,090 - 2,090 72,641 (3,813) 68,828 Turnover by destination Unaudited Unaudited Nine months Nine months Audited ended ended Year ended 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 United Kingdom 6,298 4,989 7,280 Continental Europe 19,263 8,790 11,030 Eastern Europe 2,106 2,868 4,599 Middle East 805 441 633 Africa 7,715 4,767 7,451 Europe, Middle East and Africa (EMEA) 36,187 21,855 30,993 Asia-Pacific 11,513 5,568 9,090 North America and Canada 23,982 13,959 20,756 Central and Latin America 4,782 5,539 7,989 Total turnover by destination 76,464 46,921 68,828 Turnover by activity Unaudited Unaudited Nine months Nine months Audited ended ended Year ended 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 Licence sales 13,587 11,815 19,123 Professional services income: Implementation and migrations, consulting and training 30,188 11,886 17,499 Hardware 196 466 466 Non-telecom custom network solutions - 1,410 1,651 30,384 13,762 19,616 Recurring income: ASP Service 5,625 2,942 4,337 Volume upgrade licences 3,923 3,377 4,320 Support and maintenance fees 22.945 15,025 21,432 32,493 21,344 30,089 Total turnover by activity 76,464 46,921 68,828 Unaudited Nine months ended 30 June 2005 Profit/(loss) before tax Before Exceptional amortisation Amortisation of Administrative After amortisation of goodwill goodwill expense of goodwill £000 £000 £000 £000 United Kingdom 699 (758) (557) (616) Continental Europe 5,460 (8,131) (334) (3,005) Asia-Pacific (40) - - (40) Africa (283) - (155) (438) North America and Canada (194) (3,381) (165) (3,740) Central and Latin America 120 - - 120 5,762 12,270 (1,211) (7,719) Unaudited Nine months ended 30 June 2004 Profit/(loss) before tax Before Exceptional amortisation Amortisation of Administrative After amortisation of goodwill goodwill expense of goodwill £000 £000 £000 £000 United Kingdom (131) (1,150) - (1,281) Continental Europe (1,583) (1,467) - (3,050) Asia-Pacific 197 - - 197 Africa - - - - North America & Canada 5,421 (3,383) - 2,038 Central and Latin America (118) - - (118) 3,786 (6,000) - (2,214) Audited Year ended 30 September 2004 Profit/(loss) before tax Before Exceptional amortisation Amortisation of Administrative After amortisation of goodwill goodwill expense of goodwill £000 £000 £000 £000 United Kingdom 1,263 (1,402) (455) (594) Continental Europe (363) (2,849) (247) (3,459) Asia-Pacific 55 - - 55 Africa 240 - - 240 North America and Canada 7,216 (4,511) - 2,705 Central and Latin America (134) - - (134) 8,277 (8,762) (702) (1,187) Net assets/(liabilities) by origin Unaudited Unaudited Unaudited Unaudited Audited 30 June 30 June 30 June 30 June 30 September 2005 2005 2005 2004 2004 Excluding Including Including Including Unamortised Unamortised Unamortised Unamortised unamortised goodwill goodwill goodwill goodwill goodwill £000 £000 £000 £000 £000 United Kingdom 9,030 1,206 10,236 10,593 24,293 Continental Europe 16,280 43,423 59,703 10,216 54,793 Africa 1,613 - 1,613 (340) 208 Asia-Pacific 965 - 965 105 (5) North America and Canada 13,512 47,231 60,743 64,902 62,395 Central and Latin America 670 - 670 586 546 42,070 91,860 133,930 86,062 142,230 3. TAX CHARGE ON LOSS ON ORDINARY ACTIVITIES Unaudited Unaudited Audited 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 Current taxation: UK corporation tax at 30% (2004: 30%) - - - Overseas taxation 927 787 875 Prior year - 8 (305) Total current tax 927 795 570 Deferred taxation: Origination and reversal of timing differences - - (20) Tax on loss on ordinary activities 927 795 550 4. (LOSS)/EARNINGS PER ORDINARY SHARE Unaudited Unaudited Nine months Nine months Audited ended ended Year ended 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 Basic loss (8,646) (3,009) (1,737) Amortisation of goodwill and intangible assets 12,270 6,000 8,762 Exceptional items 1,211 - 702 Adjusted earnings 4,835 2,991 7,727 Number Number Number Weighted average number of shares 300,338,705 207,595,695 216,147,912 Pence Pence Pence Basic loss per ordinary share (2.88) (1.45) (0.80) Amortisation of goodwill and intangible assets 4.00 2.89 4.05 Exceptional items 0.40 - 0.32 Adjusted earnings per ordinary share 1.61 1.44 3.57 Diluted loss/earnings per share is not presented in respect of outstanding share options since none of the options are dilutive. 5. DEBTORS Unaudited Unaudited Audited 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 Trade debtors 21,340 14,607 22,532 Corporation tax recoverable 124 196 353 Overseas tax recoverable 5 79 42 Deferred tax 252 253 266 Other debtors 610 64 1,304 Prepayments and accrued income: Prepayments due within one year 5,383 2,421 4,076 Prepayments due after more than one year 636 564 583 Accrued income due within one year 15,758 8,664 11,478 44,108 26,848 40,634 6. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Unaudited Unaudited Audited 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 Obligations under finance leases 64 100 128 Trade creditors 1,925 3,015 4,946 Corporation tax 686 1,147 915 Overseas tax 86 152 103 Other creditors including taxation and social security 3,464 2,635 2,870 Deferred consideration 1,072 - - 7,297 7,049 8,962 7. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Unaudited Unaudited Audited 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 Loan 2,223 - 2,223 Obligations under finance leases 81 85 131 Other creditors 444 - 463 2,748 85 2,817 8. PROVISIONS FOR LIABILITIES AND CHARGES Unaudited Unaudited Audited 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 Onerous lease commitments 1,538 1,731 2,223 Lease incentives 597 517 607 Other provisions 893 - 573 3,028 2,248 3,403 Onerous lease commitments disclosed above relate to future estimated losses on sub-let or vacant lease commitments acquired with the Digiquant and Singl.eView businesses. Amounts provided relate to the period up to the first option to break on a property in Denmark and properties acquired with the Singl.eView acquisition. The first option to break for the Denmark property is in 2011 and accordingly the provision above includes the discounted fair value of the future losses up to this point. Lease incentives are in respect of rent free periods on certain properties leased within the group. The provision is expected to be utilised over the life of the lease which expires in 2014. The comparatives for the year ended 30 September 2004 have been reclassified to enable a consistent comparison with the current quarter. Other provisions disclosed above relate to future estimated costs to complete certain ongoing legal matters in respect of Singl.eView, a potential repayment of a grant previously received by Singl.eView and the costs of completing certain onerous fixed price implementation contracts. These provisions are expected to be utilised within one year. 9. ACCRUALS AND DEFERRED INCOME Unaudited Unaudited Audited 30 June 30 June 30 September 2005 2004 2004 £000 £000 £000 Amounts falling due within one year Accruals 8,878 4,524 8,939 Deferred income 19,771 6,855 17,460 28,649 11,379 26,399 10. STATEMENT OF MOVEMENTS ON RESERVES Called Share Foreign Profit up share premium Merger Own exchange and loss capital account reserve shares reserve account Total £000 £000 £000 £000 £000 £000 £000 At 1 October 2004 2,998 160,462 6,768 (95) (1,854) (26,049) 142,230 Issue of shares 19 282 - - - - 301 Retained loss - - - - - (8,646) (8,646) Foreign exchange translation - - - - 45 - 45 At 30 June 2005 3,017 160,744 6,768 (95) (1,809) (34,695) 133,930 END This information is provided by RNS The company news service from the London Stock Exchange

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