Final Results

InterX PLC 9 October 2000 INTERX PLC ('InterX' or the 'Group') Preliminary results for the financial year ended 5 August 2000 Board Changes Richard Jewson, Chairman, commented: 'I am delighted with these, our first results, following a year of momentous change for the Group. We have performed ahead of our plan for the software business, whilst fundamentally refocusing the Group from an IT distributor to an Internet software business.' Corporate & Operational Highlights - Acquisition of Cromwell Media Limited in March 2000 (subsequently renamed InterX Technology Limited) - Placing and Open Offer to raise £50 million in March 2000 - Sale of Ideal Hardware Limited to Bell Microproducts, Inc. in July 2000 - BladeRunner licenses sold, inter alia, to Royal & SunAlliance, Cambridge University Press and eFinancialNews - Integrator partnerships secured with CMG Admiral, Nettec and Genisys - European training partnership concluded with Azlan - Change of InterX year end to 30 June Financial Highlights - Continuing operations - Turnover of £3.1 million - Operating loss (pre-exceptionals and amortisation of goodwill) of £8.4 million - Discontinued operations - Turnover of £400 million (1999: £318 million) - Operating profit (pre-exceptionals and amortisation of goodwill) of £4.3 million (1999: £6.8 million) - Losses per share, before exceptional items and amortisation of goodwill, of 18.8 p - Amortisation of goodwill of £13.6 million - Net funds at year end of £34.4 million (1999: £0.4 million) Board Changes Announced Today - James Wickes, co-founder of InterX, to stand down from Board following the successful refocusing of the Group - Jim Feeney, formerly Chairman of Cromwell Media Limited, also to resign as a director. Philip Crawford, Group Chief Executive of InterX, said: 'InterX has made excellent progress over the financial year, winning key customer accounts and expanding its network of qualified integrator and training partners. We have the right product in the right market place, at the right time and with the right team to create and sustain success. This, we firmly believe, will enable InterX to become a leading global player over the coming years.' For further information, please contact: InterX Laura Hotham 07799 766241 Citigate Dewe Rogerson Andy Cornelius/Freida Davidson 020 7638 9571 Chairman's Statement Introduction I am writing to you after a momentous year of change for the Group, involving a fundamental refocusing of the business and the creation of a new senior management team. The Group is now a European-based Internet software business and the transition, owing to the commitment and hard work of all concerned, has been substantially completed during the financial year under review. The key corporate events during the year have been: 10 March 2000 Acquisition of the remaining shares in Cromwell Media Limited ('Cromwell') (since renamed InterX Technology Limited ('InterX Technology')) not already held by InterX in consideration for the issue by InterX of 11,946,052 new ordinary shares; 10 March 2000 Placing and Open Offer of 1,596,235 new ordinary shares raising approximately £50m (net) for the development of the Group; 18 July 2000 Disposal of Ideal Hardware Limited ('Ideal') to Bell Microproducts, Inc. ('Bell') for approximately £13m on completion and a further £5m on 31 March 2001. In addition, Bell has an option, which expires on 31 October 2000, to purchase the freehold properties at Cox Lane, for £16m; and 7 August 2000 Appointment of Philip Crawford as Group Chief Executive. InterX is now in a position to commence the commercial roll-out of its global Internet software strategy, and accordingly, I draw your attention to the Group Chief Executive's Commentary. Results The transitional nature of this last year is reflected in the financial results. The full year's trading for Ideal is shown as a discontinued operation, while the results of InterX Technology are included for 8 months as an associated undertaking and for 4 months as a subsidiary undertaking. I find, therefore, that a comparative analysis is not helpful. For further information I direct you to the Group Finance Director's Review. Dividend As stated in the announcement to shareholders dated 29 November 1999, the Board believes that the level of expenditure required to realise the substantial opportunities available to InterX's business is such that it will not be appropriate for the Group to pay dividends in the short to medium term. The directors, therefore, do not recommend the payment of a dividend (1999: 14.0p (net)). Change of Year End The Board has decided to change the Group's year end to 30 June, allowing for easier comparison with other companies in our market. The current period will therefore be an 11 month period to 30 June 2001. We will continue to report quarterly throughout this period, with the fourth quarter being a shorter, two month, period. This change in year end will not affect our quarterly milestones as set out in our circular to shareholders dated 10 March 2000. Board Changes A number of Board changes have taken place during the year and since the year end, reflecting the changed focus of the business. I would like to welcome: - Philip Crawford, Group Chief Executive, who took up this position on 7 August 2000, following six months as Chairman of Cromwell; - Phil Sant, Executive Director, who is one of the original architects of the InterX BladeRunner software and a co-founder of Cromwell; and - Mike Shinya, who joined the Board as a Non- executive Director in August 2000. I would like to thank, for their contributions to the Board, all of the following who have stood down from their Board positions during the year: - Konrad Goess-Saurau, who resigned from the Board on 7 April 2000, following the completion of the merger with Cromwell. Konrad was an initial investor in Ideal and has served as a Non-executive Director since the Company's flotation in 1994; - Ian French, chief executive of Ideal, and Steve Lundy, finance director of Ideal, who resigned from the Board on 3 August 2000 and 14 December 1999 respectively; - James Feeney, who joined the Board as an Executive Director on 7 April 2000, following the completion of the merger with Cromwell, resigns from the Board with effect from today. James remains an employee of the Group; and - James Wickes, co-founder and formerly Chief Executive of InterX, also resigns from the Board with effect from today. I would particularly like to extend the Board's and the Company's gratitude to James Wickes. James has been instrumental in the transformation of the business from a niche private IT hardware distributor to a quoted European-based Internet software company. James, acknowledging the changing shape of the business, has decided to stand down from the Board today to make way for the new senior management whose experience and skills will be essential in realising the Group's global ambitions. James, who is a significant shareholder, will remain actively involved in the Group's future. Staff The success of refocusing the business has only been possible through the hard work of all the staff at InterX. I would like to thank them for their enthusiasm, commitment and willingness to accept so much change. Prospects Today we launch our new brand identity, which is designed to reflect our Group's pivotal position in the evolution of our customers' e-business strategies. I am confident that our technology and business strategy, driven by our excellent management team, will ensure that InterX delivers significant growth in the future. Richard Jewson Chairman 9 October 2000 Group Chief Executive's Commentary Introduction InterX has made excellent progress over the last financial year. We are winning new customers, forging solid integrator and training partnerships, and recruiting and training significant numbers of new high quality staff. We have a clear vision as to where our future business prospects lie. We are well positioned in a dynamic market place and are constantly focusing on our customers and their need to operate effectively both today and in the future. As the Internet evolves, so we need to ensure that we are always ahead of our competitors. We are totally focused on delivering our stated objective of becoming a global software technology business. We are delivering functionality and satisfaction to our customers and partners alike. We have the right product in the right market place, at the right time and with the right team to create and sustain success. Accordingly, we are confident of achieving significant growth over the coming years. Our Strategy InterX's strategy to become the leading European-based Internet software company is based on superior technology - a technology that enables our customers to maximise the potential of their e-business opportunities well ahead of their competitors. Our Success InterX BladeRunner is the foundation for the future development of the Group. Only InterX BladeRunner provides the scope and flexibility required to change an Internet business without coding. This means that a business can drive speed to market and speed to device, and at the same time, lower the cost of deployment and ownership into the future. Evidence of our success can be seen in the quality of customers we have already secured and the business development projects in which we have an interest: - Royal & SunAlliance Insurance ('RSA') is one of the largest financial services companies in the UK, offering a broad portfolio of insurance products to nearly 2 million customers. RSA has looked to InterX to provide a UK-wide InterX BladeRunner licence, along with services, to develop its online systems; - Cambridge University Press ('CUP') is the world's oldest press, and one of the largest educational and academic publishers. The contract with CUP is to supply software and services as part of the introduction of an online content delivery and e- commerce platform; - Silicon.com is one of the largest webcasters in Europe, delivering e-business news to IT professionals. Silicon has recently launched its second generation website and is soon to be launching a German service; - Diligenti, in which InterX has an investment, is a worldwide commercial partner to the Life Sciences industry. It is Diligenti's intention to create value by combining the best of existing distribution channels with new routes to market. InterX is a technology partner to Diligenti; and - ComputerWeekly.com, part of the Reed Business Information Limited Group and in which InterX has an investment, is using InterX BladeRunner as a platform to consolidate three existing IT websites and create a single IT portal. During the last quarter of the financial year under review we beat our target of two new accounts for InterX by winning three. All of these customers fall within our current target markets of financial services, media and publishing. Our Partnerships A critical element in our ability to scale the business, domestically and internationally, is the identification and development of a network of qualified integrator partners. Again, we have exceeded our expectations and developed partnerships with three leading integrators: CMG Admiral, Nettec and Genisys. The appointment of Azlan Group PLC, Europe's leading service-centred distributor focusing on computer network technology, as our exclusive training partner in Europe, ensures that our integrators will be properly trained. Right Product We have the right product. InterX's product offerings are spearheaded by InterX BladeRunner, a new generation of web application technology. InterX BladeRunner is an industrial-strength, multi-channel, multi-device and multi-media Internet application platform that enables the management and dynamic delivery of transactions and personalised content. It is, in short, an advanced data- driven eCRM platform. It seamlessly integrates a customer's business systems with the Internet - not just the Internet accessed by today's personal computers, but also the emerging Internet accessed by new Internet-enabled devices, for example mobile phones, personal digital assistants and interactive digital television. The integration of these diverse and complex devices is not just made easier with our technology but we also provide our customers with the ability to achieve it more quickly and at less cost. We term this critical technical advantage as 'speed to device'. Only InterX BladeRunner is ready-configured to deliver appropriate content to these devices as and when they become viable marketing channels without any massive re- programming efforts. Right Place Today's winners in e-business must have functionality to succeed. A more commercially advantageous functionality is what InterX provides. InterX is in exactly the right place to take advantage of business requirements for today's content and media-rich Internet, especially as its use increases daily. We are now a European-based Internet software company and poised to serve business needs in the key markets of Europe and around the globe. Furthermore, InterX BladeRunner has been produced in the UK by our skilled developers, who are easily accessible to customers at all stages of the implementation process and who have a clear understanding of the technology issues faced by our customers. Right Time It is the right time to take advantage of the European headstart in e-business. Now that the froth has subsided, it is time for real businesses to get on and add real business advantage. The proliferation of new Internet connected devices in Europe, a community that increasingly uses popular technology, creates an environment ideally suited to InterX. We are positioned to work with and deliver to a variety of companies, from established companies like RSA, to younger Internet businesses like Silicon.com. We are dedicated to making every size and type of company a potential customer for our technology and the customers won in the last year prove that this is a viable objective. Right Team None of this would be possible without the right team. At InterX we have the right executive team to evolve our specific technology, to develop our software products and to deliver on time. The team is: Philip Crawford, Group Chief Executive I joined as a Non-executive Director in April 2000 and was appointed CEO on 7 August 2000. Previously I was president of EDS International, with particular responsibility for overseas development, and before that, senior vice president for Oracle Corporation. Simon Barker, Executive Vice President Simon, who qualified as an ACA with Arthur Young in 1984, co-founded InterX in 1986 and has been responsible for the flotation of the business in 1994 and its corporate development to date. Rob Bruce, Executive Vice President, EMEA Rob joined Cromwell in February 2000 as Chief Executive. Previously, Rob was instrumental in setting up the sales and marketing division of BroadVision UK. Before that, he spent five years at Oracle in sales and marketing positions. Simon Miesegaes, Executive Vice President, Finance Simon has been Group Finance Director since 1997. Previously he held a number of positions at Binder Hamlyn, where he also qualified as an ACA. Phil Sant, Executive Vice President, Technology Phil co-founded Cromwell and is one of the original architects of the InterX BladeRunner software. Prior to running his own business he worked for Compaq Computer GmbH, where he had responsibility for the performance and reliability engineering of mission-critical client-server systems. Rob Wirszycz, Executive Vice President, Corporate and Business Development Rob was previously the global alliance director of EDS International, and before that, director general of the Computing Software and Services Association. Outlook I am confident that InterX possesses the right combination of all the elements we need to achieve our objectives. We have the right product in the right market place, at the right time and with the right team working on it. We are determined to succeed. Philip Crawford Group Chief Executive Group Finance Director's Review Profit and Loss Account Group turnover was £403.1m (1999: £318.1m) of which £3.1m related to continuing operations and £400.0m to discontinued operations. Group loss before tax, after exceptional items, was £20.6m compared to a profit of £2.1m in 1999. These results, however, must be put into context by considering the impact of discontinued operations, exceptional items and the Group's investment in acquisitions and new business activities. Group operating loss, before exceptional items and amortisation of goodwill, was £4.1m, of which continuing operations accounted for £8.4m of operating losses and discontinued operations accounted for £4.3m of operating profit. Exceptional Items and Goodwill As a result of the fundamental changes to the Group's operating activities a number of exceptional costs have been incurred during the year: - Restructuring costs of £0.5m were incurred at Ideal, prior to the disposal, relating to the reorganisation of Ideal's distribution activities; - We have chosen to write-off the total of £204m of goodwill arising upon the acquisition of Cromwell over a five year period; Accordingly, goodwill of £13.6m was amortised during the year; - Costs of £603,000 were incurred in relation to the securing of domain names and related trademarks; and - A one-off asset write-off of £1.4m relating to previously capitalised itnetwork.com website development costs was made as a result of entering into the ComputerWeekly.com Limited joint venture, of which InterX owns 25 per cent. Taxation The taxation credit of £153,000 represents movements in deferred tax and an overprovision in respect of prior years. Group tax losses are currently estimated to be £6.1m (1999: Nil). Earnings Per Share Losses per share, after exceptional items, were 79.69p (1999; earning: 6.24p). Losses per share, before exceptional items and amortisation of goodwill, were 18.80p (1999; earnings: 21.31p). Balance Sheet The main components of the Balance Sheet have changed substantially from the previous year end as a result of the Placing and Open Offer, the acquisition of Cromwell and the disposal of Ideal. The disposal of Ideal means that stock, trade debtors and trade creditors are no longer substantial items, while the acquisition and fundraising have resulted in substantial goodwill and cash balances: - Goodwill at 5 August 2000 was £190.5m, and is being written off over a period of 5 years from the date it was incurred; - Tangible assets include £13.7m in respect of the Group's freehold properties at Cox Lane. Bell, the acquiror of Ideal, has options, which expire on 31 October 2000, to acquire the properties for £16m; and - The year end cash balance was £34.5m. This, and the movement in funds in the year, are analysed in more details in the Cash Flow section below. Share Capital The acquisition of Cromwell involved the issue of 11,946,052 new ordinary shares. The Placing and Open Offer to raise approximately £50m (net of expenses) involved the issue of 1,596,235 new ordinary shares. At 5 August 2000, the Group had 34,833,401 ordinary shares in issue, an increase of 64.4% from 30 July 1999. Upon completing the sale of Ideal on 3 August 2000, some 506,965 share options which had previously been granted to employees of Ideal became exercisable. The options remain exercisable until 31 March 2002. Cash Flow Operating Activities The net cash outflow from operating activities of £34.7m reflects primarily the working capital movement within Ideal, up to the point of sale. During the transaction process for the sale of Ideal, it was agreed that Ideal should continue to increase its working capital requirement, which was satisfied by an invoice discounting facility. This facility was transferred to Bell as part of the transaction. Accordingly, of the cash outflow of £34.7m, some £29.7m relates to Ideal. Interest Net interest payable of £619,000 reflects interest income of £759,000, arising on the cash balances received as part of the Placing and Open Offer, and £1.4m interest expense on borrowings, including Ideal's invoice discounting facility. Capital Expenditure Capital expenditure consisted primarily of £2.3m in respect of computer equipment, the majority of which was purchased for continuing operations. Acquisitions and Disposals The corporate activity during the year resulted in the following significant cash flows: - £2.8m outflow in respect of fees on the acquisition of Cromwell; - £11.6m inflow (net of expenses) in respect of proceeds from the sale of Ideal; - £19.9m inflow in respect of the overdraft sold with Ideal; and - £6.6m outflow in respect of our investments in Cromwell and associated companies. Dividends Dividends of £1.7m were paid during the year in respect of the final dividend for the year ended 30 July 1999. Financing The Placing and Open Offer raised £54.2m, of which some £1.3m was used to pay expenses, which have been set-off against the share premium account, and some £2.8m used in respect of expenses, which have been capitalised and are included in the Acquisitions and Disposals section above. Of the net Placing and Open Offer proceeds of £50.1m, some £14.2m was used to repay bank borrowings and overdrafts. Properties Cox Lane As detailed above, Bell has been granted options, which expire on 31 October 2000, to acquire the Group's two freehold properties at Cox Lane for £16m. Holden House During the year, the Group entered into 15 year leases in respect of three adjoining properties in London, at a total rent of £468,000 per annum. These properties currently house the operations of certain of the Group's associated companies, including ComputerWeekly.com Limited. 27West The Group has entered into a 15 year lease in respect of part of 27West at an annual rent of £1.6m. Capital expenditure in respect of fitting out costs is expected to be £3.5m. These offices will, from the end of November, house nearly all the Group's operations. Included within other debtors is an amount of £4.8m in respect of the rent deposit paid. Glenthorne Mews The freehold property at Glenthorne Mews will continue to house certain activities. Conclusion The Board has now reviewed the Group's business plan for the next two financial periods. 2000 1999 (audited) (audited) Notes Before Except Total exceptional -ional items items and amortis- and ation of amortisa goodwill -tion of goodwill £'000 £'000 £'000 £'000 Turnover Existing 1,280 - 1,280 318,056 operations Acquisitions 1,817 - 1,817 - Continuing 3,097 - 3,097 318,056 operations Discontinued - 400,048 - operations 400,048 2 - 403,145 318,056 403,145 Cost of sales (372,450) - (372,450) (288,512) Gross profit 2 30,695 - 30,695 29,544 Other operating 1,430 - 1,430 - income Distribution costs - Trading (14,439) - (14,439) (12,088) - Ideal - (467) (467) (120) restructuring (14,439) (467) (14,906) (12,208) Administrative expenses Trading (21,749) - (21,749) (10,596) Amortisation of - (13,609) (13,609) - goodwill Purchase of 3 - (603) (603) - domain name Ideal 3 - - - (580) restructuring InterX 3 - - - (160) restructuring IT Network write 3 - (1,359) (1,359) (3,688) off of website (1999: development) (21,749) (15,571) (37,320) (15,024) Operating (loss)/profit Existing (7,231) (1,962) (9,193) 2,312 operations Acquisitions (1,132) (13,609) (14,741) - Continuing (8,363) (15,571) (23,934) 2,312 operations Discontinued 4,300 (467) 3,833 - operations (4,063) (16,038) (20,101) 2,312 Share of (445) - (445) 42 results of associated undertakings Profit on sale - 400 400 - of subsidiary Undertaking (Loss)/profit on (4,508) (15,638) (20,146) 2,354 ordinary activities before interest Interest receivable 759 - 759 337 Interest payable (1,233) - (1,233) (601) (Loss)/profit on (4,982) (15,638) (20,620) 2,090 ordinary activities before taxation Tax on 153 (761) (loss)/profit on ordinary activities (Loss)/profit on (20,467) 1,329 ordinary activities after taxation Dividends - (2,967) Deficit for the (20,467) (1,638) financial year INTERX PLC Group Profit and Loss Account for the year ended 5 August 2000 (1999: year ended 30 July) 2000 1999 (audited) (audited) Basic earnings per share (79.69p) 6.27p Less : amortisation of goodwill and exceptional items (net of taxation) Amortisation of 52.99p - goodwill Purchase of domain name 2.35p - Ideal restructuring 1.82p 2.28p costs InterX restructuring - 0.75p costs IT Network write 5.29p 12.01p off of website (1999: development) Profit on sale of (1.56p) - subsidiary undertaking Earnings per share (18.80p) 21.31p before exceptional items and amortisation of goodwill First interim ordinary - 6.00p dividend Final ordinary - 8.00p dividend There were no recognised gains or losses in either period other than those in the Group profit and loss account. INTERX PLC Balance Sheet At 5 August 2000 (1999: 30 July) Group 2000 1999 Notes (audited) (audited) £'000 £'000 Fixed assets Goodwill 190,526 - Intangible assets 212 - Tangible assets 15,965 19,431 Investments 4,136 120 210,839 19,551 Current assets Stocks - 9,280 Debtors 9,346 52,324 Cash at bank and 34,504 8,241 in hand 43,850 69,845 Creditors: amounts (8,323) (67,581) falling due within one year Net current assets 35,527 2,264 Total assets less current 246,366 21,815 liabilities Creditors: amounts (68) (6,387) falling due after more than one year Provision for liabilities - (130) and charges Net assets 246,298 15,298 Capital and reserves Called up share capital 1,742 1,063 (including shares to be issued) Share premium account 55,385 2,663 Capital redemption 31 31 reserve Other reserves 198,066 - Profit and loss account (8,926) 11,541 Equity shareholders' 7 246,298 15,298 funds INTERX PLC Cash Flow Statement For the year ended 5 August 2000 (1999: 30 July) Notes Year Year ended ended 30 July 5 August 1999 2000 (audited) (audited) £'000 £'000 Net cash flow from 8 (34,742) 1,056 operating activities Returns on investments And servicing of finance Interest received 759 337 Interest paid (1,378) (522) Net cash outflow from returns on investments (619) (185) and servicing of finance Taxation (468) (2,787) Capital expenditure and financial investment Purchase of intangible (81) - fixed assets Purchase of tangible (3,668) (6,853) fixed assets Sale of tangible 39 4,800 fixed assets Purchase of trade 663 - investment Sale of trade (663) - investment Net cash outflow (3,710) (2,053) for capital expenditure Acquisitions and disposals Purchase of subsidiary (2,832) - Undertaking Net cash acquired 384 - with subsidiary undertaking Disposal of subsidiary 11,597 - undertaking Net overdraft sold 19,935 - with subsidiary undertaking Investment in associated (6,634) - undertakings Net cash inflow 22,450 - from disposals and acquisitions Equity dividends paid (1,695) (2,967) Net cash outflow (18,784) (6,936) before financing Financing New bank loans - 4,940 acquired Repayment of loans (7,861) (1,419) Issue of ordinary 52,953 1 share capital Capital element of (45) - finance lease rental payments Net cash inflow from 45,047 3,522 financing Increase/(decrease) 26,263 (3,414) in cash in the year Reconciliation of net cash flow to movement in net debt Increase/(decrease) 26,263 (3,414) in cash in the year Net cash outflow/(inflow) from decrease/(increase) 7,906 (3,521) in debt & lease financing Change in net funds 34,169 (6,935) resulting from cash flows New finance leases (136) - Finance leases acquired (250) - with subsidiary undertaking Finance leases sold 238 - with subsidiary undertaking Arrangement fee (67) (19) amortisation Movement in net funds 33,954 (6,954) in the year Net funds at start 9 447 7,401 of year Net funds at end 9 34,401 447 of year INTERX PLC Cash flow statement for the year ended 5 August 2000. Notes 1. Basis of preparation The comparative figures for the year ended 30 July 1999 have been extracted from the Group's statutory accounts to that date; these 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 preliminary 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 year are consistent with those of the previous year. 2. Segmental information The Group has no material operations other than those in the UK. Turnover and gross profit was as follows: Year ended 5 August 2000 Electronic Parent Distribu- Total Product Company Technology Intelligence £'000 £'000 £'000 £'000 £'000 Turnover 1,280 - 1,817 400,048 403,145 Cost of (560) - (25) (371,865) (372,450) Sales Gross profit 720 - 1,792 28,183 30,695 Other - - - 1,430 1,430 Operating Income Distribution costs - Trading - - - (14,439) (14,439) - Ideal re- - - - (467) (467) structuring - - - (14,906) (14,906) Administrati ve expenses - Trading (5,214) (2,737) (2,924) (10,874) (21,749) - - - (13,609) - (13,609) Amortisation of goodwill - Purchase - (603) - - (603) of domain name - IT Network write-off of 1,359) - - - (1,359) website (6,573) (3,340) (16,533) (10,874) (37,320) Operating (5,853) (3,340) (14,741) 3,833 (20,101) (loss) /profit Year ended 30 July 1999 Turnover 435 - - 317,621 318,056 Cost of sales (188) - - (288,324) (288,512) Gross profit 247 - - 29,297 29,544 Distribution costs - Trading - - - (12,088) (12,088) - Ideal re- - - - (120) (120) structuring - - - (12,208) (12,208) Administrative expenses - Trading (279) (293) - (10,024) (10,596) - Ideal re- - - - (580) (580) structuring - InterX re- - (160) - - (160) re structuring - IT Network (3,688) - - (3,688) development (3,967) (453) - (10,604) (15,024) Operating (3,720) (453) - 6,485 2,312 (loss) /profit Turnover and gross profit by destination were as follows: Year Year ended 30 July 1999 ended 5 (audited) August 2000 (audited) UK Europe Total UK Europe Total £'000 £'000 £'000 £'000 £'000 £'000 Turnover 356,673 46,472 403,145 275,059 42,997 318,056 Gross profit 29,154 1,541 30,695 28,299 1,245 29,544 Margin 8.0% 3.8% 7.6% 10.3% 2.9% 9.3% 3. Exceptional Items Reported before operating (loss)/profit The purchase of the interx.com domain name and other related names together with trademarks have been charged to the profit and loss account. The Ideal restructuring costs in 1999 and 2000 arose from redundancy programmes which were implemented. The InterX restructuring costs in 1999 arose due to the costs associated with the creation of the InterX parent company and the subsequent hive down of assets from InterX plc to its subsidiary undertakings The IT Network costs in 1999 relate to the development and launch of the IT Network website. In 2000 the IT Network costs relate to the impairment of the website previously capitalised. Reported after operating (loss)/profit The profit on sale of discontinued operations relates to the disposal of the Group's interest in the ordinary share capital of Ideal Hardware Limited, and is stated after provision for expenses assocated with the disposal. 4. Profit on sale of subsidiary undertaking The profit on sale of subsidiary undertaking relates to the disposal of the Group's interest in the ordinary share capital of Ideal Hardware Limited 5. Taxation The taxation credit/(charge) for the year has been calculated at an estimated tax rate of 31% (1999:31%). 6. Earnings per share Earnings per share for the period is based on the loss attributable to the weighted average of 25,682,338 (30 July 1999 : 21,194,134) ordinary shares in issue during the period 7. Share capital and reserves Movements in share capital and reserves reserves were as follows: Share Share Capital Other Profit Total capital premium redempt- reserves and account ion loss reserve account £'000 £'000 £'000 £'000 £'000 £'000 At 30 July 1,063 2,663 31 - 11,541 15,298 1999 Issues of 679 52,722 - - - 53,401 shares Merger - - - 198,066 - 198,066 reserve Deficit for - - - - (20,467) (20,467) the financial year At 5 August 1,742 55,385 31 198,066 (8,926) 246,298 2000 8. Reconciliation of operating (loss)/profit to net cash inflow from operating activities 2000 1999 (audited) (audited) £'000 £'000 Operating (loss)/ (20,101) 2,312 profit Depreciation 3,063 1,815 charges Amortisation of 13,609 - goodwill Amortisation of 23 - intangibles Amount written 1,359 - off website development Loss on disposal 163 11 of fixed assets Increase in stock (17,060) (3,033) Increase in debtors (36,103) (20,207) Increase in 20,305 20,158 creditors Net cash (outflow) (34,742) 1,056 /inflow from operating activities 9. Analysis of net funds At 31 Cash Other At 5 July 1999 flow non August (audited) cash 2000 move- (audited) ments £'000 £'000 £'000 £'000 Cash at bank 8,241 26,263 - 34,504 and in hand Debt due (1,407) 1,474 (67) - Within 1 year Debt due (6,387) 6,387 - - After 1 year Finance leases - 45 (148) (103) (7,794) 7,906 (215) (103) Total net funds 447 34,169 (215) 34,401 A copy of this report is being sent to all shareholders. Copies are available to the public on request from the Company's registered office, at 27 Great West Road, Brentford, Middlesex TW8 9AS.

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