3rd Quarter & 9 Mths Results
365 Corporation PLC
1 March 2001
Third Quarter and Nine Months Results
For the quarter and nine months ended 31 December 2000
365 reports nine month revenue of £35.6m
nine month revenue up 136%
nine month gross profit up 108% to £14.3m
unique users(1) up 178% to 2.9m
365 Corporation plc (LSE: TSF), the digital media and communications company,
today announces results for the nine months and quarter ended 31 December 2000
(Q3).
Financial Highlights
- Nine month revenue up 136% to £35.6m (9 months to 31 December 1999: £
15.1m)
- Nine month gross profit up 108% to £14.3m (9 months to 31 December 1999:
£6.9m)
- Q3 revenue up 13% for the quarter to £13.6m (Q2: £12.0m) and 143% on Q3
1999 (£5.6m)
- Q3 gross profit up 14% for the quarter to £5.5m (Q2: £4.8m) and 120% on
Q3 1999 (£2.5m)
- Operating loss(3) of £4.0m (Q2 2001 £3.0m), including £0.5m investment
in Guardian Angel during the quarter
- Cash and short-term deposits of £31.4m at 31 December 2000
Operational Highlights
Consumer Division
- Announcement of development of Europe's first comprehensive voice
portal, code-named Guardian Angel
- Voice portal commercial partners include William Hill, Domino's Pizza,
Teleflorist and more recently, HMV Direct
- Increased total monthly users to 2.9m(1) in December 2000, up 20% on
previous quarter (September 2000 2.4m)
- Various SMS products launched (including live scores, daily horoscope,
dating services)
- Recent audiotext deals with Manchester Evening News and Johnston Press
- Signed deals with Sportingbet.com (online betting), Sporting Index
(spread betting), Reebok and Adidas (advertising) during the quarter and
Flutter.com (person-to-person betting) in February 2001
Business Division
- Acquisitions of Systematic, Essential and Ringback to extend
distribution, and increase addressable customer base in South East England
- Further expansion into Ireland through acquisition of Valuetel, and
exclusive distribution partnership with Samsung announced in February 2001
- Increased business customers to 4,518 in December 2000, up 15% on
previous quarter (September 2000 3,945)
- Business365 web site successfully launched
Financial data (£'000)
Quarterly 3 months 3 months 3 months 9 months 9 months
ended 30 ended 30 ended 31 ended 31 ended 31
Jun 2000 Sep 2000 Dec 2000 Dec 2000 Dec 1999
Revenue
Consumer Division 6,406 7,497 7,525 21,428 10,328
Business Division 3,596 4,529 6,062 14,187 4,773
Total revenue 10,002 12,026 13,587 35,615 15,101
Cost of sales (5,999) (7,186) (8,085) (21,270) (8,210)
Total gross profit 4,003 4,840 5,502 14,345 6,891
Operating costs (5,360) (5,577) (6,119) (17,056) (7,082)
before sales &
marketing costs*
Operating loss (1,357) (737) (617) (2,711) (191)
before sales &
marketing costs*
Sales and marketing (2,031) (2,279) (3,365) (7,675) (2,857)
costs**
Operating loss* (3,388) (3,016) (3,982) (10,386) (3,048)
* before amortisation of goodwill, provision for NIC and similar taxes on
share options and shares issued at below market value.
** includes direct selling expenses and sales office overheads (but excludes
audiotext media spend)
Operating data
Dec 1999 Mar 2000 Jun 2000 Sep 2000 Dec 2000
Consumer Division
- unique users (1) 1,031,000 1,752,000 2,091,000 2,391,000 2,862,000
Business Division
- customers(2) 2,484 2,989 3,473 3,945 4,518
Notes:
1. 365 defines the number of unique users in a month as the number of people
who visit one of 365's web sites (including those web sites created and
hosted by 365 for third parties) during a month, telephone one of 365's
audiotext telephone services during a month or are registered to receive
an e-mail product at a selected mid-month date. If a person uses the same
365 service more than once in a month they are counted only once as a
unique user. If, however, that person uses more than one 365 service
during that month, they are counted as a unique user once for each service
used.
(2) 365 defines the number of business customers as the total number of
customers at the month end who have been billed for that month.
(3) before amortisation of goodwill, provision for NIC and similar taxes on
share options and shares issued at below market value.
Dan Thompson, Chief Executive Officer, commenting on the results said:
'Since our IPO in December 1999, 365 has succeeded in building both its
divisions - Consumer and Business - into large, fast-growing operations with
considerable profit potential.
While recording this growth, we are also particularly pleased to have met
bottom line expectations despite investing in new areas such as the 'Guardian
Angel' voice portal.
The Consumer Division user numbers increased 20% to 2.9 million during the
quarter and are now well in excess of the 2.5 million we had identified as
critical mass. This now allows us to focus on the profitability of the
individual services offered by the division.
Our Business Division grew rapidly in the quarter, with revenues up to £6.1m -
three times greater than the same quarter last year. Four acquisitions were
made - Systematic, Essential, Ringback and Valuetel - which have significantly
expanded our distribution in the UK and Ireland. Our Business Division is now
one of the fastest growing providers of communications services to the SME
sector.
Overall, the calendar year 2000 was planned to produce high levels of growth
in our revenue and critical mass in our operating metrics. We are delighted
with the results achieved in the year and now look forward to maintaining
growth while focusing on the move towards bottom line profitability'
For further enquiries, please contact
365 Corporation plc Tel: 0870 1107 365
Dan Thompson, Chief Executive Officer www.365corp.com
Martin Turner, Finance Director
Financial Dynamics Tel: 020 7831 3113
Ben Atwell
Fiona Meiklejohn
Interim Report for the Quarter and Nine Months ended 31 December 2000
Business Review
Consumer Division
On 5 December we announced the launch of our ground-breaking voice portal,
code-named 'Guardian Angel'. The product allows individuals to use mobile and
fixed line phones to access a full range of customisable communication,
commerce, content and community services by the user's own voice. As part of
our v-commerce offering on 'Guardian Angel' we have already established
commercial partnerships with William Hill, Domino's Pizza and Teleflorist and
the latest addition of HMV Direct will enable users to purchase CDs, DVDs and
videos. Prior to a soft launch in March the current focus in beta testing is
maximizing speech recognition performance in a range of environmental
conditions, and refining key features of the communications section such as
email retrieval, SMS notifications, and conference calls. We are on track for
a full commercial launch in early spring. During the quarter we invested
approximately £0.5m in the project, and have written off these costs to our
profit and loss account.
Our internet operation continued to grow during the quarter. We signed
exclusive deals with Sportingbet.com and Sporting Index to further strengthen
our online betting and gaming offering, and concluded major advertising deals
with Adidas and Reebok. We also launched SMS services in the sports (live
results) and lifestyle (daily horoscope, dating) areas.
Voice service ('audiotext') revenues fell by 6% in the quarter as a result of
adverse market conditions, which arise from time to time. Since Christmas we
have seen a good recovery in the market and expect our audiotext revenues to
grow over the next three months.
We built on our critical mass, boosting user numbers by 20% to 2.9m from Q2
and 178% from the same quarter last year, as a result of a seasonal marketing
campaign
Our Television and Broadband departments continued to expand their portfolio
of visual content for digital TV and broadband platforms.
Business Division
Our Business Division grew strongly during the quarter, which included the
traditionally slow Christmas period. Revenues increased 34% compared to the
previous quarter to over £6m (including £1.7m from acquired companies),
demonstrating the success of 365's 'one-stop-shop' strategy to provide a
complete telecommunication solution to SME customers.
During the quarter we acquired three additional hardware operations in the UK
- Essential Voice and Data partnership, Systematic Telecoms Limited and
Ringback Communications Limited. These acquisitions have significantly
strengthened our presence in the South East of England, and increased our
distribution.
We also made an important step in Ireland with the acquisition of Valuetel in
December. Valuetel is an established voice reseller, based in Dublin, which
will complement our existing operation in Cork. Together with our recently
announced partnership with Samsung for exclusive distribution of its
telecommunication products and services, we feel that we can replicate our UK
success in Ireland which will provide a model for further international
expansion in Europe.
Financial Review
Consumer Division
Consumer Division revenue for the quarter was £7.5m compared to £3.6m for the
same quarter last year and £7.5m for the previous quarter. The 6% decline in
audiotext revenue was offset by the 11% increase in internet revenue and 34%
increase in 'other' revenue (primarily television, broadband and consumer
mobile revenue). The division increased its gross profit margin to 46% for the
quarter, compared to 45% in Q2, reflecting our successful response to the
short-term audiotext market conditions. Sales and marketing costs increased to
£1.5m (Q2 £1.2m) as we further promoted our products with a subsequent
increase in users to 2.9m. Administrative expenses (excluding sales and
marketing) increased to £4.2m (Q2 £3.6m), which includes £0.3m of development
costs relating to our voice portal. The division recorded an operating loss(1)
of £2.2m for the quarter and £4.9m for the year to date.
Business Division
Business Division revenue for the quarter was £6.1m compared to £2.0m for the
same quarter last year and £4.5m for the previous quarter. The division
generated a gross profit of 34% for the quarter, up from 33% in Q2 as its
sales mix included more profitable value-added services. Sales and marketing
costs increased to £1.9m (Q2 £1.1m) following the four acquisitions during the
quarter. Administrative expenses (excluding sales and marketing) totaled £
1.1m, a small decrease from the previous quarter (Q2 £1.2m). The division
recorded an operating loss(1) of £0.9m for the quarter and £2.7m for the year
to date.
Corporate
Corporate administrative costs were £0.8m the same as for the previous
quarter. The group amortised £6.8m of goodwill during the quarter (Q2 £6.3m)
and the provision for NI and similar taxes on share options reduced by £76,000
in the quarter to £38,000 following the downward movement in the share price.
Liquidity and Capital Resources
During the quarter ended 31 December 2000, the Company invested cash of £2.6m
in acquisitions, incurred £0.7m of capital expenditure and consumed £6.6m in
its operating activities of which £3.1m was used to finance working capital as
a result of the Company's growth during the quarter, particularly in the
Business Division. As at 31 December, 365's cash and investments balance was £
31.4m.
Developments Since Quarter End
- 'Guardian Angel' voice portal commercial partnership with HMV Direct and
technical development partnership with e-Cal
- exclusive distribution partnership with Samsung to sell its full range
of products to businesses in Ireland
- acquisition of the Formula 1 web site formula1.co.uk for a consideration
of £250,000, payable in cash and shares, strengthening 365's market
position.
- exclusive person-to-person betting deal with Flutter.com, integrating
Flutters' services and 365's content
- expansion of audiotext services through deals with Manchester Evening
News and Johnston Press
- launch of two new web sites, Laughs365.com, a humour filled
entertainment site, and Footy365.com, a site for younger football fans.
Current Trading And Outlook
Since the quarter end we have seen a good recovery in the audiotext market
and, together with the continued growth in revenues and gross margins in other
areas, disciplined control of costs and effective marketing of our products,
are confident of the success of our drive to profitability. In particular we
look forward to the commercial launch of our voice portal in the spring and
the significant revenue and profit generation opportunities it will bring to
365.
Consolidated profit and loss account
for the quarter and 9 months ended 31 December 2000
Quarter Quarter 9 months 9 months
ended 31 ended 31 ended 31 ended 31
December December December December
2000 1999 2000 1999
unaudited unaudited & unaudited unaudited &
£'000 restated £ £'000 restated £
'000 '000
Note
Turnover
Continuing operations 11,842 5,566 28,829 15,101
Acquisitions 1,745 - 6,786 -
3;4 13,587 5,566 35,615 15,101
Cost of sales (8,085) (3,047) (21,270) (8,210)
Gross profit 5,502 2,519 14,345 6,891
Administrative expenses 9,484 5,334 24,731 9,939
before the following:
Amortisation of goodwill 6,829 659 18,973 1,788
Provision for NIC and (76) 590 (666) 660
similar taxes on share
options
Shares issued at under - 2,261 - 2,261
value
Total administrative 16,237 8,844 43,038 14,648
expenses
Operating loss before 3;4 (3,982) (2,815) (10,386) (3,048)
goodwill amortisation,
provision for NIC and
similar taxes on share
options and shares issued
at under value
Continuing operations (11,031) (6,325) (29,361) (7,757)
Acquisitions 296 - 668 -
Operating loss (10,735) (6,325) (28,693) (7,757)
Net interest receivable 542 240 1,983 372
Loss on ordinary activities (10,193) (6,085) (26,710) (7,385)
before taxation
Taxation - - (26) -
Loss on ordinary activities (10,193) (6,085) (26,736) (7,385)
after taxation
Minority interests (11) 23 46 82
Retained loss for the (10,204) (6,062) (26,690) (7,303)
period
Loss per ordinary share 5
Basic and diluted loss per (1.7p) (1.6p) (4.2p) (1.8p)
share before amortisation
of goodwill, provision for
NIC and similar taxes on
share options and shares
issued at under value
Basic and diluted loss per (5.1p) (5.3p) (13.4p) (6.8p)
share
Statement of total recognised gains and losses
for the quarter and 9 months ended 31 December 2000
Quarter ended Quarter ended 31 9 months 9 months ended
31 December December 1999 ended 31 31 December 1999
2000 unaudited & December 2000 unaudited &
unaudited £ restated £'000 unaudited £ restated £'000
'000 '000
Retained (10,204) (6,062) (26,690) (7,303)
loss for
the period
Exchange (27) 15 (5) 19
adjustments
Total (10,231) (6,047) (26,695) (7,284)
recognised
losses for
the period
Prior year 10 - (2,221) 1,992 (2,406)
adjustment
Total (10,231) (8,268) (24,703) (9,690)
recognised
losses
since last
period
Consolidated balance sheet
as at 31 December 2000
31 31 December 31 March
December 1999 2000
2000
unaudited unaudited & unaudited &
restated restated
Note £'000 £'000 £'000
Fixed assets
Intangible fixed assets 36,720 10,101 40,660
Tangible fixed assets 3,026 1,122 1,675
39,746 11,223 42,335
Current assets
Stock - finished goods 1,754 43 587
Debtors 14,991 5,437 8,284
Investments - short term deposits 28,468 61,000 49,500
Cash at bank and in hand 2,931 1,947 3,340
48,144 68,427 61,711
Creditors: amounts falling due (11,660) (6,986) (8,309)
within one year
Net current assets 36,484 61,441 53,402
Total assets less current 76,230 72,664 95,737
liabilities
Creditors: amounts falling due (2,968) (11) (245)
after more than one year
Provisions for liabilities and 10 (38) (660) (704)
charges
Net assets 73,224 71,993 94,788
Capital and reserves 6
Called up share capital 503 458 493
Shares to be issued 1,359 1,001 80
Share premium account 72,320 72,262 72,220
Merger reserve 38,535 5,770 34,844
Profit and loss account (39,391) (7,351) (12,696)
Total equity shareholders' funds 7 73,326 72,140 94,941
Minority interests (102) (147) (153)
Capital employed 73,224 71,993 94,788
Consolidated cash flow statement
for the quarter and nine months ended 31 December 2000
Quarter ended Quarter ended 9 months 9 months
31 December 31 December ended 31 ended 31
2000 1999 December 2000 December 1999
unaudited £ unaudited £ unaudited £ unaudited £
'000 '000 '000 '000
Note
Net cash outflow 8 (6,642) (1,870) (14,224) (2,782)
from operating
activities
Return on
investments and
servicing of
finance
Net interest 658 240 2,052 372
Taxation - - (72) -
Capital
expenditure and
financial
investment
Purchase of (701) (271) (1,617) (676)
tangible fixed
assets
Acquisitions
Net cash 71 - 491 12
acquired with
subsidiary
undertakings
Purchase of 9 (2,682) (155) (7,803) (172)
subsidiaries
(2,611) (155) (7,312) (160)
Cash outflow (9,296) (2,056) (21,173) (2,246)
before use of
liquid resources
and financing
Management of
liquid resources
Decrease/ 7,967 (61,000) 21,032 (61,000)
(increase) in
short-term
deposits
Financing
Issue of shares - 63,600 14 2,603
Expenses on - (5,326) - (5,326)
issue of shares
Capital element (19) - (75) -
of finance lease
payments
(19) 58,274 (61) (2,723)
(Decrease) in (1,348) (4,782) (202) (3,369)
cash in the
period
Notes to the quarterly financial statements
1. Basis of preparation
The financial statements for the quarter and nine months ended 31 December
2000 have been prepared using accounting policies consistent with those set
out in the Company's consolidated 2000 statutory accounts, apart from those
relating to the costs of share option schemes. Following the issue of UITF25
the Company is now required to spread employer's National Insurance
contributions and other similar taxes over the period to when the share
options become exercisable (see Note 10). These statements do not constitute
statutory accounts within the meaning of section 240 of the Companies Act 1985
and are unaudited.
Financial information for the quarter and nine months ended 31 December 1999
has been extracted from the accounting records of the group.
The balances and results as at 31 March 2000 have been extracted from the
statutory accounts which have been filed with the Registrar of Companies,
restated to reflect the change in accounting policy detailed above. The
auditors' report on those accounts was unqualified and did not contain any
statement under section 237 of the Companies Act 1985.
The results for the quarter and nine months ended 31 December 2000 were
approved by the Board on 28 February 2001 and will posted on the Company's web
site, www.365corp.com, on 1 March 2001 and advertised in The Independent
newspaper on Saturday 3 March 2001.
2. Operating data December 1999 to December 2000
Dec Mar Jun Sep Dec
Consumer Division
Unique users(1)
Sport 660,000 1,214,000 1,484,000 1,645,000 1,846,000
Entertainment 225,000 366,000 318,000 436,000 614,000
Lifestyle 146,000 172,000 289,000 310,000 404,000
Total unique users 1,031,000 1,752,000 2,091,000 2,391,000 2,864,000
User sessions(2)
Sport 8,540,000 10,651,000 11,416,000 11,829,000 11,258,000
Entertainment 559,000 760,000 721,000 917,000 1,251,000
Lifestyle 792,000 921,000 1,243,000 1,219,000 1,167,000
Total user sessions 9,891,000 12,332,000 13,380,000 13,965,000 13,676,000
Audiotext minutes(3) 6,063,000 5,784,000 7,792,000 6,968,000 5,869,000
Business Division
Business customers(4) 2,484 2,989 3,473 3,945 4,518
Business minutes(5) 9,244,000 14,448,000 16,409,000 17,488,000 14,187,908
Notes:
1. 365 defines the number of unique users in a month as the number of people
who visit one of 365's web sites (including those web sites created and
hosted by 365 for third parties) during a month, telephone one of 365's
audiotext telephone services during a month or are registered to receive
an e-mail product at a selected mid-month date. If a person uses the same
365 service more than once in a month they are counted only once as a
unique user. If, however, that person uses more than one 365 service
during that month, they are counted as a unique user once for each service
used.
2. 365 defines the number of user sessions in a month as the number of times
that each 365 service is used. If a user leaves a web site and returns
more than 30 minutes later the return visit is counted as a separate user
session. E-mail user sessions represent the number of registered
subscribers at the date selected to determine the number of unique e-mail
users multiplied by the number of issues in that month of the e-mail
service they are registered to receive. Each incoming call to 365's
audiotext telephone services represents a user session.
3. 365 defines the number of audiotext minutes in a month as the number of
minutes recorded by 365 and its carriers in respect of calls to 365's
audiotext services in that month.
4. 365 defines the number of business customers at each month end as the total
number of customers at that month end who have been billed for that month.
5. 365 defines the number of business minutes in a month as the number of
minutes tracked by the carriers' systems which are billed to the Business
Division's customers in that month.
3. Segmental analysis - for the quarter ended 31 December 2000
Turnover and loss before taxation are classified below by class of business
and by geographical area by origin, which is not materially different from
geographical area by destination.
Consumer Division Business Division
Business Analysis (£'000) Quarter Quarter Quarter Quarter
ended 31 ended 31 ended 31 ended 31
Dec 2000 Dec 1999 Dec 2000 Dec 1999
Turnover
Consumer internet 1,732 399 - -
Audiotext 5,138 3,186 - -
Business services - - 6,062 1,981
Other 655 - - -
7,525 3,585 6,062 1,981
Continuing operations 7,525 3,585 4,317 1,981
Acquisitions - - 1,745 -
Cost of sales 4,097 1,671 3,988 1,376
Gross profit 3,428 1,914 2,074 605
Administrative expenses (excluding sales & 4,178 1,781 1,109 337
marketing costs) before goodwill
amortisation, NIC and similar taxes on
share options and shares issued at under
value
Operating (loss)/profit (excluding sales &
marketing costs) before goodwill
amortisation, NIC and similar taxes on
share options and shares issued at under (750) 133 965 268
value
Sales and marketing costs 1,457 1,225 1,908 626
Operating loss before goodwill
amortisation, NIC and similar taxes on (2,207) (1,092) (943) (358)
share options and shares issued at under
value
Goodwill amortisation 6,103 504 726 155
Provision for NIC and similar taxes on (24) 242 (16) 110
share options
Shares issued at under value - - - -
Operating loss (8,286) (1,838) (1,653) (623)
Continuing operations (8,286) (1,838) (1,949) (623)
Acquisitions - - 296 -
Net interest receivable 5 4 25 -
Loss on ordinary activities before taxation (8,281) (1,834) (1,628) (623)
Group Overhead Total Group
Business Analysis (£'000) Quarter Quarter Quarter Quarter
ended 31 ended 31 ended 31 ended 31
Dec2000 Dec 1999 Dec 2000 Dec 1999
Turnover
Consumer internet - - 1,732 399
Audiotext - - 5,138 3,186
Business services - - 6,062 1,981
Other - - 655 -
- - 13,587 5,566
Continuing operations - - 11,842 5,566
Acquisitions - - 1,745 -
Cost of sales - - 8,085 3,047
Gross profit - - 5,502 2,519
Administrative expenses (excluding sales & 832 1,365 6,119 3,483
marketing costs) before goodwill
amortisation, NIC and similar taxes on
share options and shares issued at under
value
Operating (loss)/profit (excluding sales &
marketing costs) before goodwill
amortisation, NIC and similar taxes on
share options and shares issued at under (832) (1,365) (617) (964)
value
Sales and marketing costs - - 3,365 1,851
Operating loss before goodwill
amortisation, NIC and similar taxes on (832) (1,365) (3,982) (2,815)
share options and shares issued at under
value
Goodwill amortisation - - 6,829 659
Provision for NIC and similar taxes on (36) 238 (76) 590
share options
Shares issued at under value - 2,261 - 2,261
Operating loss (796) (3,864) (10,735) (6,325)
Continuing operations (796) (3,864) (11,031) (6,325)
Acquisitions - - 296 -
Net interest receivable 512 236 542 240
Loss on ordinary activities before taxation (284) (3,628) (10,193) (6,085)
Geographical Turnover Operating profit/(loss) before goodwill
analysis (£ amortisation, provision for NIC and similar
'000) taxes on share options and shares issued at
under value
Quarter Quarter Quarter ended 31 Dec Quarter ended 31 Dec
ended 31 ended 31 2000 1999
Dec 2000 Dec 1999
United 13,319 5,460 (3,135) (2,425)
Kingdom
France 91 32 (533) (241)
Germany - 1 (18) (19)
Chile 52 66 (26) 9
South Africa 30 - (129) (146)
USA 95 7 (141) 7
13,587 5,566 (3,982) (2,815)
4. Segmental analysis - for the 9 months ended 31 December 2000
Turnover and loss before taxation are classified below by class of business
and by geographical area by origin, which is not materially different from
geographical area by destination.
Consumer Business Division
Division
Business Analysis (£'000) 9 months 9 months 9 months 9 months
ended 31 ended 31 ended 31 ended 31
Dec 2000 Dec 1999 Dec 2000 Dec 1999
Turnover
Consumer internet 4,379 836 - -
Audiotext 15,567 9,492 - -
Business services - - 14,187 4,773
Other 1,482 - - -
21,428 10,328 14,187 4,773
Continuing operations 16,649 10,328 12,180 4,773
Acquisitions 4,779 - 2,007 -
Cost of sales 11,813 4,889 9,457 3,321
Gross profit 9,615 5,439 4,730 1,452
Administrative expenses (excluding sales & 10,878 4,539 3,459 732
marketing costs) before goodwill
amortisation, NIC and similar taxes on
share options and shares issued at under
value
Operating (loss)/profit (excluding sales &
marketing costs) before goodwill
amortisation, NIC and similar taxes on
share options and shares issued at under (1,263) 900 1,271 720
value
Sales and marketing costs 3,678 1,487 3,999 1,370
Operating (loss) before goodwill
amortisation, NIC and similar taxes on (4,941) (587) (2,728) (650)
share options and shares issued at under
value
Goodwill amortisation 17,415 1,412 1,558 376
Provision for NIC and similar taxes on (176) 242 (159) 110
share options
Shares issued at under value - - - -
Operating loss (22,180) (2,241) (4,127) (1,136)
Continuing operations (22,578) (2,241) (4,397) (1,136)
Acquisitions 398 - 270 -
Net interest receivable/(payable) 5 15 78 (1)
Loss on ordinary activities before taxation (22,175) (2,226) (4,049) (1,137)
Group Overhead Total Group
Business Analysis (£'000) 9 months 9 months 9 months 9 months
ended 31 ended 31 ended 31 ended 31
Dec 2000 Dec 1999 Dec 2000 Dec 1999
Turnover
Consumer internet - - 4,379 836
Audiotext - - 15,567 9,492
Business services - - 14,187 4,773
Other - - 1,482 -
- - 35,615 15,101
Continuing operations - - 28,829 15,101
Acquisitions - - 6,786 -
Cost of sales - - 21,270 8,210
Gross profit - - 14,345 6,891
Administrative expenses (excluding sales & 2,717 1,811 17,054 7,082
marketing costs) before goodwill
amortisation, NIC and similar taxes on
share options and shares issued at under
value
Operating (loss)/profit (excluding sales &
marketing costs) before goodwill
amortisation, NIC and similar taxes on
share options and shares issued at under (2,717) (1,811) (2,709) (191)
value
Sales and marketing costs - - 7,677 2,857
Operating (loss) before goodwill (2,717) (1,811) (10,386) (3,048)
amortisation, NIC and similar taxes on
share options and shares issued at under
value
Goodwill amortisation - - 18,973 1,788
Provision for NIC and similar taxes on (331) 308 (666) 660
share options
Shares issued at under value - 2,261 - 2,261
Operating loss (2,386) (4,380) (28,693) (7,757)
Continuing operations (2,386) (4,380) (29,361) (7,757)
Acquisitions - - 668 -
Net interest receivable/(payable) 1,900 358 1,983 372
Loss on ordinary activities before taxation (486) (4,022) (26,710) (7,385)
Geographical Turnover Operating profit/(loss) before goodwill
analysis (£ amortisation, provision for NIC and similar
'000) taxes on share options and shares issued at
under value
9 months 9 months 9 months ended 31 Dec 9 months ended 31 Dec
ended 31 ended 31 2000 1999
Dec 2000 Dec 1999
United 35,010 14,736 (7,802) (2,456)
Kingdom
France 258 49 (1,677) (365)
Germany - 93 (23) (16)
Chile 136 216 (59) 9
South Africa 49 - (442) (227)
USA 162 7 (383) 7
35,615 15,101 (10,386) (3,048)
5. Loss per ordinary share of 0.25p each
Quarter Quarter 9 months 9 months
ended 31 ended 31 ended 31 ended
December December December
2000 £'000 1999 £'000 2000 £'000 31
December
1999 £
'000
Loss for the period before the (3,451) (2,552) (8,383) (2,594)
following:
Goodwill amortisation (6,829) (659) (18,973) (1,788)
Provision for NIC and similar taxes 76 (590) 666 (660)
on share options
Shares issued at under value - (2,261) - (2,261)
Loss for the period (10,204) (6,062) (26,690) (7,303)
Weighted average number of shares in
the period:
Basic and diluted 201,276,455 155,109,419 199,752,896 142,707,734
Basic and diluted loss per share (1.7p) (1.6p) (4.2p) (1.8p)
before amortisation of goodwill,
provision for NIC and similar taxes
on share options and shares issued at
under value
Goodwill amortisation (3.4p) (0.4p) (9.5p) (1.3p)
Provision for NIC and similar taxes (0.0p) (1.8p) 0.3p (2.1p)
on share options
Shares issued at under value (1.0p) (1.5p) (0.0p) (1.6p)
Basic and diluted loss per share (5.1p) (5.3p) (13.4p) (6.8p)
The weighted average number of shares has been restated to reflect the 4-for-1
share split in November 1999.
None of the contingently issuable shares or share options gives rise to a
dilution in the loss per share due to the losses made in the period.
6. Share capital and reserves
Ordinary Shares to Share Merger Profit and
share be issued premium reserve loss account
capital £ £'000 account £ £'000 £'000
'000 '000
At 1 April 2000 493 80 72,220 34,844 (14,688)
Prior year adjustment - - - - 1,992
Retained loss for the - - - - (26,690)
period
Exchange adjustments - - - - (5)
Shares issued in - - 13 - -
respect of share
options exercised
Shares issued for 10 - - 3,691 -
acquisitions
Premium on shares - - 87 - -
issued to employees
Contingent share - 1,339 - - -
consideration for
acquisitions
Movement in fair value - (60) - - -
of contingent share
consideration
At 31 December 2000 503 1,359 72,320 38,535 (39,391)
Shares were issued for the acquisitions detailed in Note 9. The difference
between the fair value and nominal value of the shares has been transferred to
the merger reserve.
7. Reconciliation of movement in shareholders' funds
Quarter ended Quarter ended 9 months ended 9 months ended
31 December 31 December 31 December 31 December
2000 £'000 1999 £'000 2000 £'000 1999 £'000
Opening 83,010 16,835 94,941 14,629
shareholders' funds
*
Loss for the period (10,204) (6,062) (26,690) (7,303)
New share capital - 58,274 - 61,717
(net of expenses)
issued for cash
Charge in respect - 2,077 - 2,077
of shares issued at
under value
Shares issued for 1,010 - 3,700 -
acquisitions
Premium on shares - - 87 -
issued to employees
Net movement in (463) 1,001 1,279 1,001
contingent share
consideration
Employee share - - 14 -
options exercised
Exchange (27) 15 (5) 19
adjustments offset
in reserves
Closing 73,326 72,140 73,326 72,140
shareholders' funds
* opening shareholders' funds on 1 April 2000 were originally £92,949,000
before adding the prior year adjustment of £1,992,000.
8. Net cash outflow from operating activities
Quarter ended Quarter ended 9 months ended 9 months ended
31 December 31 December 31 December 31 December
2000 £'000 1999 £'000 2000 £'000 1999 £'000
Operating loss (10,735) (8,546) (28,693) (1,432)
Depreciation 351 110 914 189
Amortisation of 6,886 659 19,114 1,129
intangible assets
(Increase) in stock (530) (10) (920) (17)
(Increase) in (3,052) (2,016) (5,026) (836)
debtors
(Decrease)/increase 438 5,856 387 55
in creditors/
provisions
Charge in respect - 2,077 - 2,077
of shares issued at
under value
(6,642) (1,870) (14,224) (2,782)
9. Acquisitions
(a) Essential Voice and Data partnership and Essential Network Solutions
Limited
On 4 October 2000, 365 acquired the assets of the Essential Voice and Data
partnership and the remaining shares in Essential Network Solutions Limited
for a total estimated consideration of £1,624,000.
£'000
Fair value of net liabilities acquired (238)
Goodwill 1,862
Cost of acquisition 1,624
Comprising:
Cash 500
Shares issued 372
Contingent cash consideration 450
Deferred cash consideration 50
Contingent share consideration 193
Acquisition costs 59
1,624
Goodwill arising on the acquisition Essential Voice and Data and the remaining
shares in Essential Network Solutions is being amortised on a straight-line
basis over the estimated economic useful life of 5 years.
(b) Systematic Telecoms Limited
On 4 October 2000, 365 acquired the entire issued share capital of Systematic
Telecoms Limited for a total estimated consideration of £2,356,000.
£'000
Book value of net assets acquired 263
Goodwill 2,093
Cost of acquisition 2,356
Comprising:
Cash 1,300
Shares issued 179
Contingent cash consideration 600
Contingent share consideration 170
Deferred share consideration 30
Acquisition costs 77
2,356
Goodwill arising on the acquisition of Systematic Telecoms is being amortised
on a straight-line basis over the estimated economic useful life of 5 years.
(c) Ringback Communications Limited and RBC Services Limited
On 8 November 2000 Symphony Telecom Limited, a wholly owned subsidiary of 365,
acquired the assets and trade of Ringback Communications Limited and RBC
Services Limited for a consideration of £580,000.
£'000
Fair value of net assets acquired 95
Goodwill 485
Cost of acquisition 580
Comprising:
Cash 340
Deferred cash consideration 200
Acquisition costs 40
580
Goodwill arising on the acquisition of Ringback and RBC Services is being
amortised on a straight-line basis over the estimated economic useful life of
5 years.
(d) Valuetel Limited
On 30 November 2000 Symphony Telecom Ireland Limited, a wholly owned
subsidiary of 365, acquired the assets and trade of Valuetel Limited for a
consideration of £160,000.
£'000
Book value of net liabilities acquired (314)
Goodwill 474
Cost of acquisition 160
Comprising:
Cash 156
Acquisition costs 4
160
Goodwill arising on the acquisition of Valuetel is being amortised on a
straight-line basis over the estimated economic useful life of 5 years.
10. Future liabilities
On exercise of share options issued after 6 April 1999, the Company will be
required to pay National Insurance and similar foreign taxes on the difference
between the exercise price and market value of the shares issued. The Company
will become unconditionally liable to pay the National Insurance and similar
foreign taxes upon exercise of the options, which are exercisable over a
period of up to seven years from the date of the grant. Following the issue of
UITF25 the Company is now required to spread the liability over the period to
vesting. Previously the Company made a full provision following the grant of
options and as a result has made a prior year adjustment of £1,992,000 to
reflect the change in accounting policy. Prior year and quarter comparatives
have been restated to reflect the new policy.
The amount of the National Insurance payable will depend on the number of
employees who remain with the Company and exercise their options, the market
price of the Company's ordinary shares at the time of exercise and the
prevailing National Insurance rates at the time. The accounts for the third
quarter and nine months ended 31 December 2000 include adjustments arising
from the movement in the Company's share price between 31 March 2000 and 31
December 2000 and the exercise or lapsing of options.
Friday, 10th January 2025
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