3rd Quarter Results
InterX PLC
26 April 2002
FOR IMMEDIATE RELEASE 26 APRIL 2002
INTERX PLC
Third Quarter ('Q3') Results
Three months ended 31 March 2002
HIGHLIGHTS
• Sale, conditional on shareholder approval, of InterX Technology Limited's
('ITL') business and certain assets and certain assets of InterX plc ('the
Sale') to The Innovation Group plc ('TiG') in Q4
• Circular issued today in respect of the Sale
• Operating loss, before restructuring charges, amortisation and impairment
of goodwill, for Q3 was £1.7 million (Q2 2002: £3.5 million)
• Restructuring charges for Q3 were £3.7 million (Q2 2002: £10.2 million)
• Amortisation of goodwill for Q3 was £0.8 million (Q2 2002: £10.2 million)
• Impairment of goodwill for Q3 was £4.7 million (Q2 2002: £122.7 million)
• Share of associates' operating losses for Q3 was £1.4 million (Q2 2002:
£5.4 million)
• Loss for Q3 was £10.4 million (Q2 2002: £153.1 million)
• Loss per share, before exceptional items, amortisation and impairment of
goodwill, for Q3 was 9.57p (Q2 2002: 31.98p)
• Loss per share for Q3 was 31.81p (Q2 2002: 489.62p)
• Cash at 31 March 2002 was £3.3 million (30 December 2001: £6.2 million)
For further information, please contact:
InterX plc 020 8817 4000
Simon Barker, Chief Executive
Simon Miesegaes, Finance Director
INTERX PLC
('InterX', the 'Company' or the 'Group')
Q3 Results
Three months ended 31 March 2002
Chairman's Statement
The Board today announces the Group's results for the three months ended 31
March 2002, the third quarter of our 2002 financial year.
Results
Turnover and gross loss for the three month period ended 31 March 2002 (Q3 2002)
were £0.06 million (Q2 2002: £0.5 million) and £0.4 million (Q2 2002: £0.4
million) respectively.
The operating loss before restructuring charges, amortisation and impairment of
goodwill for Q3 was £1.7 million (Q2 2002: £3.5 million). The loss, after
exceptional items, amortisation and impairment of goodwill for Q3 was £10.4
million (Q2 2002: £153.1 million). Loss per share was 31.81p (Q2 2002: 489.62p).
Cash at 31 March 2002 was £3.3 million (30 December 2001: £6.2 million).
Prospects
The Company has today published and sent to its shareholders a comprehensive
circular. The circular contains a detailed letter to shareholders from myself,
which includes the Board's reasons for the sale of ITL's intellectual property
rights and business and a statement on prospects. I draw both the circular and
the Financial Review below to your attention.
Richard Jewson 26 April 2002
Financial Review
Profit and loss account
Overheads for the Group for the quarter, excluding the operating exceptional
items, amortisation and impairment of goodwill were £2.1 million (Q2 2002: £3.9
million).
As a result of the expected sale of ITL's business a release of accruals no
longer required of £1.1 million has been included in the profit and loss account
for the quarter and this, combined with reduced staff costs in the quarter is
responsible for the reduction when compared with Q2. The accruals release in the
period impacted cost of sales (£297,000), sales and marketing costs (£588,000),
research and development costs (£123,000) and other administrative costs
(£71,000).
Several restructuring provisions have been made in the period and these
comprise:
• a charge of £397,000 in respect of redundancies and fixed asset provisions
made in March 2002;
• a further provision of £1.8 million (£3.6 million in total) has been made
against the rent deposit on 27 West, due to uncertainty over its recovery;
and
• a further provision of £1.5 million (£2.3 million in total) has been made
in respect of rent on the unoccupied floor space at 27 West for the period
to 31 March 2004 on the basis that it may take some two years to sublet the
property.
Amortisation of goodwill for the quarter was £768,000, following the impairment
of goodwill to £10 million at 30 December 2001. The Board has decided that the
remaining goodwill should be impaired to £4.5 million at 31 March 2002, which
represents the guaranteed consideration that is expected from the proposed Sale,
net of costs.
The lower level of the Group's share of losses from the Diligenti Limited group
(the 'Diligenti Group') of £1.5 million (Q2 2002: £7.1 million) arose
principally as a result of the high level of provisions previously made against
the goodwill and other fixed assets included in the Diligenti Group balance
sheet.
The profit on sale of subsidiary of £1.6 million represents the final element of
the disposal of Ideal Hardware Limited ('Ideal'), with cash received during the
period of £697,000 and the remainder comprising principally the write back of a
former inter company creditor with Ideal that was no longer required.
Balance sheet and cash flow
The principal element of debtors at 31 March 2002 continues to be the balance of
£14.3 million, net of provision, in respect of principal and accrued interest on
the Diligenti loan. Whilst there are still uncertainties on whether full
recovery will be made of the gross balance due, the Board are of the view that
the provision currently in place, at 20 per cent. of the gross value, is an
appropriate indication of the Board's view that some of the loan may not be
recoverable.
Provisions for liabilities and charges include:
• an amount of £7.1 million, representing the balance of the Group's share
of the Diligenti Group's losses in excess of the original cost of
investment, net of goodwill; and
• a provision of £2.3 million relating to rent on unoccupied floor space.
The net cash outflow from operating activities remained consistent with the
previous quarter at £3.9 million but payments in Q3 included a higher level of
restructuring costs.
Going concern
The Board has continued to review, on a regular basis, the Group's cash
requirements. On the basis that the transaction with TiG is completed and
agreement has been reached with the landlord of 27 West for a suspension of rent
payments for five quarters, with effect from 25 March 2002, the Board considers
it appropriate to prepare the results for Q3 on a going concern basis.
INTERX PLC
Group profit and loss account
for the three and nine months ended 31 March 2002
3 months 3 months 9 months 9 months 11 months
ended ended ended ended
31 March ended 31 March 4 May 30 June
4 May 2002 2001 2001
2002 2001 (unaudited) (unaudited) (audited)
(unaudited) (unaudited)
£'000 £'000 £'000 £'000 £'000
Notes
Turnover
Product licences - - 465 1,163 1,163
Services 61 985 572 3,720 4,428
2 61 985 1,037 4,883 5,591
Cost of sales
Product licences - - - (65) (65)
Services 297 (1,912) (129) (8,048) (9,015)
297 (1,912) (129) (8,113) (9,080)
Gross profit/(loss)
Product licences - - 465 1,098 1,098
Services 358 (927) 443 (4,328) (4,587)
2 358 (927) 908 (3,230) (3,489)
Overheads
Distribution costs
- Sales and marketing 56 (940) (1,986) (3,538) (4,258)
Administrative expenses
- Research and development (661) (642) (2,820) (2,162) (2,834)
- Other general and administrative (1,474) (2,159) (5,028) (8,900) (9,861)
costs
Exceptional items and amortisation of
goodwill
- Restructuring 3 (3,704) (1,596) (13,924) (1,596) (1,596)
- Gain on sale of investment in 3 - - - - 308
own shares
- Amortisation of goodwill (768) (10,207) (21,182) (30,621) (37,425)
- Impairment of goodwill 3 (4,731) - (127,418) - -
(11,338) (14,604) (170,372) (43,279) (51,408)
(11,282) (15,544) (172,358) (46,817) (55,666)
Operating loss before amortisation
and impairment of goodwill (5,425) (6,264) (22,850) (19,426) (21,730)
- Amortisation of goodwill (768) (10,207) (21,182) (30,621) (37,425)
- Impairment of goodwill (4,731) - (127,418) - -
Operating loss 2 (10,924) (16,471) (171,450) (50,047) (59,155)
Share of associates' operating (1,393) (1,380) (8,189) (4,169) (4,987)
losses
Associate - impairment of goodwill - - (1,862) - -
Profit on sale of subsidiary 4 1,588 - 1,588 - -
Profit on sale of fixed assets 4 318 - 318 1,905 1,905
Profit on part disposal of 4 32 - 497 - -
associate
Loss on ordinary activities before
interest and taxation (10,379) (17,851) (179,098) (52,311) (62,237)
Interest receivable 108 647 1,189 1,785 2,123
Interest payable (306) (2) (600) (5) (464)
Loss on ordinary activities before (10,577) (17,206) (178,509) (50,531) (60,578)
taxation
Tax on loss on ordinary activities 5 - - - - -
Loss on ordinary activities after (10,577) (17,206) (178,509) (50,531) (60,578)
taxation
Share of associates' minority 184 - 643 - 506
interests
Loss for the period 7 (10,393) (17,206) (177,866) (50,531) (60,072)
Turnover, gross profit/(loss) and operating loss for this period and the comparative periods arose
from continuing operations.
INTERX PLC
Group profit and loss account
(continued)
for the three and nine months ended 31 March 2002
3 months 3 months 9 months 9 months 11 months
ended ended ended ended
31 March ended 31 March 4 May 30 June
4 May 2002 2001 2001
2002 2001 (unaudited) (unaudited) (audited)
(unaudited) (unaudited)
Note
Basic and diluted loss per share 6 (31.81p) (49.20p) (544.34p) (144.57p) (189.90p)
Less: exceptional items,
amortisation and impairment of
goodwill
Restructuring 11.34p 4.56p 42.61p 4.56p 5.05p
Gain on sale of investment in own - - - - (0.97p)
shares
Amortisation of goodwill 2.35p 29.19p 64.82p 87.62p 118.31p
Impairment of goodwill 14.48p - 389.95p - -
Profit on sale of subsidiary (4.86p) - (4.86p) - -
Profit on sale of fixed assets (0.97p) - (0.97p) (5.45p) (6.02p)
Profit on part disposal of (0.10p) - (1.52p) - -
associate
Loss per share before exceptional
items, amortisation and impairment (9.57p) (15.45p) (54.31p) (57.84p) (73.53p)
of goodwill
Group statement of total recognised gains and losses
for the three and nine months ended 31 March 2002
£'000 £'000 £'000 £'000 £'000
Loss for the period
Group (8,881) (15,826) (167,868) (46,362) (55,203)
Share of associates (1,512) (1,380) (9,998) (4,169) (4,869)
(10,393) (17,206) (177,866) (50,531) (60,072)
Deemed disposal of part of
interest in associates
Group - - - 3,422 3,422
Share of associate - - - - (25)
- - - 3,422 3,397
Loss on foreign currency
translation
Share of associate (196) - (221) - (390)
(196) - (221) 3,422 3,007
Total recognised gains and losses
relating to the period (10,589) (17,206) (178,087) (47,109) (57,065)
INTERX PLC
Group balance sheet
at 31 March 2002
At 31 March At 30 At 30 June At 4 May
2002 December 2001 2001
2001
Note (unaudited) (unaudited) (audited) (unaudited)
£'000 £'000 £'000 £'000
Fixed assets
Goodwill 4,500 10,000 153,101 159,905
Intangible assets - 59 349 106
Tangible assets - 687 5,060 5,320
Investments 388 399 3,319 3,903
4,888 11,145 161,829 169,234
Current assets
Debtors
- due within one year 1,668 16,069 18,016 18,257
- due after one year 16,092 3,615 5,423 5,423
Cash at bank, in hand and term 9 3,252 6,246 16,975 20,242
deposits
21,012 25,930 40,414 43,922
Creditors: amounts falling due (4,317) (7,859) (11,214) (11,728)
within one year
Net current assets 16,695 18,071 29,200 32,194
Total assets less current 21,583 29,216 191,029 201,428
liabilities
Creditors: amounts falling due after more (9) (17) (35) (39)
than one year
Provisions for liabilities and (9,552) (6,588) (885) (1,820)
charges
Net assets 12,022 22,611 190,109 199,569
INTERX PLC
Group balance sheet
at 31 March 2002 (continued)
At 31 March At 30 December At 30 June At 4 May
2002 2001 2001 2001
Note (unaudited) (unaudited) (audited) (unaudited)
£'000 £'000 £'000 £'000
Capital and reserves
Called up share capital 1,750 1,750 1,750 1,750
Share premium account 55,799 55,799 55,799 55,757
Capital redemption reserve 31 31 31 31
Other reserves 201,917 201,917 201,917 198,066
Profit and loss account (247,475) (236,886) (69,388) (56,035)
Equity shareholders' funds 7 12,022 22,611 190,109 199,569
INTERX PLC
Group cash flow statement
for the three and nine months ended 31
March 2002
3 months 3 months 9 months 9 months 11 months
ended ended ended ended
31 March ended 31 March 4 May 30 June
4 May 2002 2001 2001
2002 2001 (unaudited) (unaudited) (audited)
(unaudited) (unaudited)
£'000 £'000 £'000 £'000 £'000
Note
Net cash outflow from operating 8 (3,916) (6,292) (12,472) (16,123) (16,854)
activities
Returns on investments and servicing of
finance
Interest received 122 602 622 1,664 1,151
Interest paid (3) (2) (10) (5) (8)
Net cash inflow from returns on investments and
servicing of finance 119 600 612 1,659 1,143
Taxation (20) - 329 - 41
Capital expenditure and financial
investment
Purchase of intangible fixed assets (7) - (115) - (248)
Purchase of tangible fixed assets (16) (1,481) (129) (4,566) (4,414)
Sale of tangible fixed assets 657 1 657 16,246 16,246
Loan to associate (500) - (3,244) (13,256) (13,640)
Net cash inflow/(outflow) for capital
expenditure and financial investment 134 (1,480) (2,831) (1,576) (2,056)
Acquisitions and disposals
Acquisition of subsidiary undertaking - - - - (200)
Disposal of subsidiary undertaking 697 1,427 697 1,427 8
Part disposal of associate - - (32) - -
Net cash inflow/(outflow) from
acquisitions and disposals 697 1,427 665 1,427 (192)
Net cash outflow before management of liquid
resources and financing (2,986) (5,745) (13,697) (14,613) (17,918)
INTERX PLC
Group cash flow statement
for the three and nine months ended 31
March 2002 (continued)
3 months 3 months 9 months 9 months 11 months
ended ended ended ended
31 March ended 31 March 4 May 30 June
4 May 2002 2001 2001
2002 2001 (unaudited) (unaudited) (audited)
(unaudited) (unaudited)
£'000 £'000 £'000 £'000 £'000
Note
Management of liquid resources
Cash placed on term deposits - (34,000) (24,154) (54,008) (73,758)
Term deposits matured 4,500 35,008 39,404 35,008 58,508
Net cash inflow/(outflow) from management
of liquid resources 4,500 1,008 15,250 (19,000) (15,250)
Financing
Issue of ordinary share capital - - - 380 422
Capital element of finance lease rental (8) (10) (26) (29) (33)
payments
Net cash (outflow)/inflow from (8) (10) (26) 351 389
financing
Increase/(decrease) in cash in the 1,506 (4,747) 1,527 (33,262) (32,779)
period
Reconciliation of net cash flow to
movement in net funds
Increase/(decrease) in cash in the 1,506 (4,747) 1,527 (33,262) (32,779)
period
Net cash outflow from decrease in debt
and lease financing 8 10 26 29 33
Net cash (inflow)/outflow from (decrease)/
increase in liquid resources (4,500) (1,008) (15,250) 19,000 15,250
Change in net funds resulting from cash (2,986) (5,745) (13,697) (14,233) (17,496)
flows
Net funds at start of period 9 6,194 25,913 16,905 34,401 34,401
Net funds at end of period 9 3,208 20,168 3,208 20,168 16,905
INTERX PLC
Notes to the financial statements
for the three and nine months ended 31 March 2002
1. Basis of preparation
The comparative figures for the period ended 30 June 2001 have been extracted from the Group's statutory accounts to
that date. These accounts received an unqualified audit report, did not contain a statement under section 237(2) or
237(3) of the Companies Act 1985 and have been filed with the Registrar of Companies. This interim statement, which
is unaudited and does not constitute statutory accounts, has been prepared on the basis of the accounting policies
laid down in those statutory accounts. The accounting policies adopted in respect of the period are consistent with
those of the previous period.
2 Segmental information
During the period the Group operated only in one business segment, namely technology. Turnover, gross profit/(loss)
and operating losses for the periods related entirely to operations in the UK.
3. Exceptional items reported before operating loss
The restructuring costs arose from redundancy programmes, associated write-downs and other provisions in February
2001, December 2001 and March 2002.
The gain on sale of investment in own shares in 2001 resulted from the sale of shares under option in the InterX
Technology Employee Benefit Trust.
The goodwill that arose on the acquisition of Cromwell Media was impaired to a carrying
amount of £10 million as at 30 December 2001 and to £4.5 million as at 31 March 2002.
4. Exceptional items reported after operating loss
The profit on sale of subsidiary comprises the final element from the disposal of the Group's interest in Ideal.
The profit on sale of fixed assets relates to the disposal, in February 2002, of a freehold property in Hammersmith
(October 2000: disposal to the new owners of Ideal of two properties occupied by Ideal).
The profit on the part disposal of the stake in an associate relates to the disposal of 12.5 per cent. of
ComputerWeekly.com Limited during September 2001. The residual interest of 12.5 per cent. is now being accounted for
as a trade investment. The profit in Q3 of £32,000 relates to the release of an accrual no longer required.
5. Taxation
There is no taxation charge or credit for the
period.
6. Loss per share
The loss per share is calculated by reference to
the following losses and numbers of shares:
3 months 3 months 9 months 9 months 11 months
ended ended ended ended
31 March ended 31 March 4 May 30 June
4 May 2002 2001 2001
2002 2001 (unaudited) (unaudited) (audited)
(unaudited) (unaudited)
£'000 £'000 £'000 £'000 £'000
Loss for the financial period
After exceptional items, amortisation
and impairment of goodwill (10,393) (17,206) (177,866) (50,531) (60,072)
Exceptional items, amortisation and
impairment of goodwill 7,265 11,803 160,121 30,312 36,808
Before exceptional items, amortisation
and impairment of goodwill (3,128) (5,403) (17,745) (20,219) (23,264)
No. of shares No. of shares No. of No. of No. of
shares shares shares
Weighted average number of shares
Weighted average ordinary shares in
issue during period 34,999,181 34,972,709 34,999,181 34,953,169 34,977,215
Weighted average ordinary shares held
by Group's employee benefit trusts (2,323,415) - (2,323,415) - (3,344,487)
For basic and diluted loss per share 32,675,766 34,972,709 32,675,766 34,953,169 31,632,728
INTERX PLC
Notes to the financial statements
for the three and nine months ended 31 March 2002 (continued)
7. Share capital and reserves
Movements in share capital and reserves
were as follows:
Share Share Capital Other Profit and Total
capital premium redemption reserves loss
reserve account
£'000 £'000 £'000 £'000 £'000 £'000
At 1 July 2001 1,750 55,799 31 201,917 (69,388) 190,109
Loss for the period - - - - (167,473) (167,473)
Other recognised gains and losses - - - - (25) (25)
At 30 December 2001 1,750 55,799 31 201,917 (236,886) 22,611
Loss for the period - - - - (10,393) (10,393)
Other recognised gains and losses - - - - (196)- (196)
At 31 March 2002 1,750 55,799 31 201,917 (247,475) 12,022
8. Reconciliation of operating loss to net
cash flow from operating activities
3 months 3 months 9 months 9 months 11 months
ended ended ended ended
31 March ended 31 March 4 May 30 June
4 May 2002 2001 2001
2002 2001 (unaudited) (unaudited) (audited)
(unaudited) (unaudited)
£'000 £'000 £'000 £'000 £'000
Operating loss (10,924) (16,471) (171,450) (50,047) (59,155)
Depreciation charges 254 326 932 1,064 1,105
Impairment of tangible fixed assets 92 - 3,547 - -
Amortisation of goodwill 768 10,207 21,182 30,621 37,425
Impairment of goodwill 4,731 - 127,418 - -
Amortisation of intangible fixed 47 18 138 66 112
assets
Impairment of intangible fixed 14 - 287 - -
assets
Write down of investment in own 11 - 62 - -
shares
Elimination of share of sale to - - - 102 102
associate
(Profit)/loss on disposal of fixed - (20) (5) 70 70
assets
(5,007) (5,940) (17,889) (18,124) (20,341)
Decrease/(increase) in debtors 1,920 (37) 8,922 (2,380) (835)
(Decrease)/increase in creditors (829) (315) (3,505) 4,381 4,322
Net cash outflow from operating activities (3,916) (6,292) (12,472) (16,123) (16,854)
INTERX PLC
Notes to the financial statements
for the three and nine months ended 31 March 2002 (continued)
9. Analysis of net funds
At Cash flow At Cash flow At
1 July 30 December 31 March 2002
2001 2001 (unaudited)
(audited) (unaudited)
£'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 1,725 21 1,746 1,506 3,252
Term deposits 15,250 (10,750) 4,500 (4,500) -
16,975 (10,729) 6,246 (2,994) 3,252
Finance leases (70) 18 (52) 8 (44)
Total net funds 16,905 (10,711) 6,194 (2,986) 3,208
This report will be available on the Company's website at
www.interx.com.
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