Interim Results for 7 Months

RTS NetWorks Group PLC 5 October 2000 RTS NETWORKS GROUP PLC Interim Results for the Seven months ended 30 June 2000 RTS Networks Group, the specialist provider of internet solutions, encompassing internet, intranet, extranet and wireless technologies, which floated on AIM in December 1999, announces Interim Results for the seven months to 30 June 2000. Highlights * The period was dedicated to laying the foundations for enhanced future revenue. In particular, the Group: * integrated the founder companies and those acquired during the period * built the appropriate technical, financial and administrative infrastructure for an expanding international company * established and equipped offices in Finland, France, UK and US * continued R&D in the areas of wireless, content management and e- and m- business * created an extensive range of WAP products and solutions * widened the client base and developed strategic partnerships. * The Group achieved sales growth of 45% in Q2 on Q1, with a similar level of growth in Q3 * The Group's growing client list includes Astra Zeneca, Boeing, Colt Telecom, France Telecom, Granada, Motorola, Nokia Networks, Reuters, Sony, Tesco, Total/Fina/Elf, and the US National Guard * In line with expectations, turnover for the period was £2.48 million, with expenditure resulting in a net loss before goodwill amortisation of £4.29 million David Ward-Perkins, Chairman, commented: 'Third quarter sales have shown a 40 per cent increase over the previous quarter with per employee revenues increasing by 30 per cent. The third quarter should show a lower level of investment in development activity, with a further significant improvement in trading. 'Our expectation is that sales and revenues per employee will continue to grow significantly in the fourth quarter, with an increase in the size of projects and number of clients. 'The Directors believe that the integration of the various constituent companies in the Group has largely been achieved and that we are on track to achieve a significant improvement in underlying trading performance during 2001, as planned, while maintaining our lead in key technical areas. The Directors are confident that the Group is well placed to take advantage of the potential of the m- and e- business market. ' For further information please contact: RTS Networks Group PLC 020 7749 5000 David Ward-Perkins, Chairman Tony Harrison, Group Managing Director Square Mile Communications 020 7601 1000 Nick Oborne/Georgina Briscoe Thursday 5 October 2000 RTS NETWORKS GROUP PLC Interim Results for the Seven months ended 30 June 2000 Summary During the period the Group successfully integrated ten Internet and wireless solutions companies, growing from a staff of 130 in December 1999 to over 260 at present. Supported by a strong component and solution offering we have shown fast growth in Finland, France, the UK and the United States. Our first seven months as a quoted company were primarily dedicated to: * integrating the founder companies and those acquired during the period; * building the appropriate technical, financial and administrative infrastructure for an expanding international company; * establishing and equipping new offices in all countries of operation; * research and development in the areas of wireless, content management and e- and m-business; * creating an extensive range of wireless application protocol (WAP) products and solutions; and * widening our blue chip client base and developing strategic partnerships. These initiatives have laid the foundations for enhanced future revenue. We achieved sales growth of 45 per cent between quarters one and two, with third quarter revenues increasing at similar rates. Future expansion will be both organic and through further acquisitions. The m- and e- business markets The services market for mobile handheld devices is forecast to be an $86 billion industry by the end of 2000 in Europe alone, and is expected to grow further with the introduction of GPRS and other broadband technologies (IDC Research). The Group's solutions enable companies to extend their business beyond the web and gain a competitive advantage through these technologies. The mobile Internet creates a challenge for businesses, requiring them to manage increasingly complex information and services across multiple channels, including PCs, mobile telephones and other Internet terminals. The Group offers solutions for both the management of transactions and content and is therefore well placed to provide clients with complete and usable applications. These areas have high growth potential with the market for content management alone estimated to be worth £10 billion by 2004 (Meta Group). As a technological forerunner in its field the Group is well positioned to benefit from these rapidly expanding markets. Financial Review Turnover for the seven months ended 30 June 2000 was £2.48 million, with expenditure of £6.77 million resulting in a net loss before goodwill amortisation of £4.29 million for the period. Following admission to trading on AIM in December 1999, the Group continued its programme of investment for future growth in line with the objectives set out at that time. The Directors believe we have established an integrated global business with a coordinated reporting structure, addressing finance, sales and resource management. This enables the Group to use and sell the products and services of all Group companies on an international basis. To achieve this level of integration, over £1 million was invested in: * marketing, including creation and launch in February of the RTSe brand across all Group companies, and the website; * research and development; * recruitment of executive staff and skilled employees; and * professional and consultancy fees on trading activities. Over £0.75 million was invested in the Group's infrastructure, including networks, communication, a multi-site intranet, and new premises in all countries. A further £1.3 million in professional fees was also incurred with the cost of Admission to AIM and acquisitions during the period. Integration During the period, ten companies were effectively merged into four trading companies, one in each country. Local operations are overseen by Group management, based in London, headed by Managing Director Tony Harrison who was appointed in April 2000. Other events in the period include the strengthening of the UK operation, with the acquisition and integration of Boxer IT in April, and the opening of additional offices in Paris, France and Pori, Finland. Solutions and components Solutions, components and products developed during the period include: * intelligent wireless solutions, integrated with 'traditional' web applications; * e- & m-commerce applications, from interface design to fulfilment and delivery; * management of text, image and sound, from multiple platforms, across multiple devices; * the RTSe wireless suite: Outlook Bridge, Route WAP, Wireless Investor and Wireless Timetable; * e- and m-finance applications, packaged under the Investor Framework umbrella; * a portfolio of tested, delivered applications for the retail and corporate intranet markets; and * content management components, including XML Editor and @Doc. Outlook In July 2000 the Group made two further acquisitions and raised £2.72 million in cash through a placing: * Synchronicity, Inc., brought strategic content management skills to the Group, including the Synchronicity Content Management component, and doubled our staff number in Seattle, USA; and * Axida Limited, a UK based e-logistics company reinforced our e-commerce capacity, notably through HDi (home delivery) and Instore (EPOS). Axida's operations will be progressively integrated into RTSe UK. Since acquisition both have traded in line with expectations. In addition, a joint venture was formed with MDC Education Group Oy in Finland to develop virtual learning environments. Third quarter sales have shown a 40 per cent increase over the previous quarter with per employee revenues increasing by 30 per cent. The third quarter should show a lower level of investment in development activity, with a further significant improvement in trading. Our expectation is that sales and revenues per employee will continue to grow significantly in the fourth quarter, with an increase in the size of projects and number of clients. Our rapidly growing blue chip client base now includes: Amadeus, AstraZeneca, Boeing, Colt Telecom, Danisco, Evli, France Telecom, Helsinki City, Granada, Merck Sharpe & Dohme, Motorola, Nissan, Nokia Networks, Reuters, Sony, Tesco, Total/Fina/Elf and the U.S. National Guard. The Directors believe that the integration of the various constituent companies in the Group has largely been achieved and that we are on track to achieve a significant improvement in underlying trading performance during 2001, as planned, while maintaining our lead in key technical areas. The Directors are confident that the Group is well placed to take advantage of the potential of the m- and e-business market. David Ward-Perkins Executive Chairman 5 October 2000 For further information please contact: RTS Networks Group PLC 020 7749 5000 David Ward-Perkins, Chairman Tony Harrison, Group Managing Director Square Mile Communications 020 7601 1000 Nick Oborne/Georgina Briscoe RTS Networks Plc Summary Consolidated Interim Results for the seven months ended 30 June 2000 Seven months ended 30 June 2000 ------------------------------------ Before Goodwill goodwill amortisation Total Notes £000's £000's £000's Turnover 2,479 - 2,479 ---------------------------------- Operating loss (4,387) (688) (5,075) Net interest receivable 94 - 94 ---------------------------------- Loss before taxation (4,293) (688) (4,981) Taxation - - - ---------------------------------- Retained loss for the period (4,293) (688) (4,981) ================================== Loss per share (p) 3 (5.37) (0.86) (6.23) ------------------------------------------------------------------------------ ------------------------------------------------------------------------------ Statement of Total Recognised Gains and Losses for the seven months ended 30 June 2000 Notes £000's Loss for the period (4,981) Currency translation (41) ------------ 5 (5,022) ============ RTS Networks Plc Consolidated Balance Sheet As at 30 June 2000 Notes £000's Fixed assets Intangible assets 9,795 Tangible assets 1,156 ------------ 10,951 Current assets Debtors due within one year 1,435 Cash on hand 1,913 ------------ 3,348 Creditors: amounts falling due within one year (1,140) ------------ Net current assets 2,208 ------------ Total assets less current liabilities 13,159 Creditors: amounts falling due after more than one year (94) ------------ 13,065 ============ Shareholders' funds Called up share capital 4 802 Share premium and other reserves 5 17,285 Profit and loss account 5 (5,022) ------------ 13,065 ============ RTS Networks Plc Summary Consolidated Cashflow For the seven months ended 30 June 2000 £000's Cash outflow from operating activities (4,323) Returns on investment and servicing of finance 94 Capital expenditure and financial investment (761) Acquisitions (889) ------------ Net cash flow before financing (5,879) Financing 7,792 ------------ Increase in cash in the period 1,913 ============ RTS Networks Plc Notes to the Financial Information For the seven months ended 30 June 2000 1. The interim financial information has been prepared in accordance with applicable accounting standards. The financial information was approved by a duly appointed and authorised committee of the Board of Directors on 4 October 2000. 2. The Group financial information consolidate the accounts of the Company and each of its subsidiary undertakings. Subsidiary undertakings are accounted for from the effective date of acquisition. Intercompany sales are eliminated on consolidation so that the Group financial information relates to external transactions only. 3. Loss per share has been calculated on the average weighted number of shares in issue during the period of 79,984,967. 4. Share capital No. £000's Authorised ordinary shares of 1p each 100,000,000 1,000 Alloted, called up and fully paid ordinary shares of 1p each 80,178,125 802 5.Shareholders' funds Share premium Share & other Profit capital reserves and loss Total £000's £000's £000's £000's Shares issued in the period 802 17,993 - 18,795 Share issue costs - (708) - (708) Loss for the period - - (5,022) (5,022) At 30 June 2000 802 17,285 (5,022) 13,065 6. Acquisitions made during the period The company completed the acquisitions of Acces SARL in France and Boxer IT Limited in the UK on 31 January 2000 and 4 April 2000 respectively.The post acquisition results and cash flows of these businesses are not material to the financialinformation above. Therefore,there is no segregation of the financial information regarding these acquisitions. 7. Events subsequent to the balance sheet date On 10 July 2000, the company acquired Synchronicity Inc, a Seattle based web development company specialising in content management, interactive portals and web based e-commerce applications,for a consideration of up to £4.25m, of which £3.25m was paid in shares and a further £1.0m contingent upon performance. On 10 July 2000, the company acquired Axida Limited, a UK based e-logistics company specialising in retail fulfilment software for a consideration of up to £6.175m, of which £3.6m was paid in shares,£1.575m in cash and a further £1.0m contingent upon performance. On 10 July 2000, the company placed a total of£4,650,000 ordinary shares at 100p per share to raise £2,725,000 in working capital and £1,925,000 to fund the acquisitions listed above. 8. The financial information set out in this document does not constitute financial statements within the meaning of section 240 of the Companies Act 1985. The company was incorporated on 8 September 1999 and accordingly the company has not yet filed any accounts with the Registrar of Companies. 9. Copies of the interim accounts will be posted to all shareholders and will be available for inspection at the Company's registered address.

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