Final Results

IBNet PLC 28 June 2002 IBNET CONTINUES TO GROW IBNet plc, the corporate intelligence, brand monitoring and internet surveillance company has today announced its preliminary results for the 9 months ended 31 March 2002. The results include 3 months trading since the interim period, reflecting the change of year-end. Key highlights: â€¢ Turnover for 9 months Â£1,188,000 (12 months to June 01: Â£402,000) â€¢ Loss before tax and interest for 9 months Â£1,867,000 (12 months to June 01: Â£24,630,000) â€¢ Turnover for 3 months to 31 March 2002 Â£720,000 â€¢ EBITDA positive during three months of trading with WebGravity â€¢ Continuing cost savings achieved from WebGravity integration â€¢ Year end changed to 31 March Commenting on the results, David Heynes, Chairman remarked: ' I am delighted to announce a strong period of cash flow positive trading for the Company. Turnover has grown significantly in this three month period, which has far outstripped H2 of last year.' ' Our products are being well received by our marketplace. We now have an established client base for all three of our major product offerings, and we work with many of the UK's major brand names and Blue Chip companies.' ' We will continue to actively pursue other organisations with whom we can work for mutual benefit. These may range from agreements to market their products and services, joint ventures or indeed acquisitions or mergers. We look to the future with confidence.' - ends - Date: 28 June 2002 For further information contact: IBNet PLC City Profile Group David Heynes, Chairman Ed Senior Toby Smallpeice, CEO Simon Courtenay 020-8987-6700 020-7448-3244 web: www.ibnetplc.com e-mail: edward.senior@city-profile.com Chairman's statement Your board has pleasure in reporting a successful three months trading to 31st March 2002. As reported in our interim statement the company has changed its year end to 31 March. This has been done to reflect the trading cycle of the business as changed by the integration of Webgravity. The acquisition of Webgravity has resulted in a step change in the company's earnings profile and has brought critical mass to the company. Webgravity has provided valuable product and cost synergies enabling the company to offer a one-stop shop solution for brand promotion and protection. The business now has three main streams of revenue being Netdetec and its related services, the Webgravity corporate search engine marketing services and Webwurld, which offers search engine marketing related products to smaller businesses and private individuals. Financial Results The turnover for the nine months ended 31st March 2002 amounted to Â£1,188,000 (year to 30 June 2001 Â£402,000). Significantly, turnover of Â£720,000 was received in the three month period to 31 March 2002. This followed the successful integration of WebGravity and reflects three months of EBITDA positive trading. The operating loss before goodwill amortisation, impairment and interest was Â£1,286,000 (year to 30 June 2001 Â£2,934,000) and loss before tax Â£1,843,000 (year to 30 June 2001 Â£2,469,000 after excluding the fixed asset impairment write off Â£21,976,000). The directors do not propose to pay a dividend. These figures only include five months trading for the company including Webgravity, but indicate that we are now beginning to generate useful levels of revenue on a reduced cost base. Review of Activities We reported at the interim stage that the integration of the IBNet and Webgravity operations had been largely completed. Further improvements in efficiency are being pursued by streamlining workflow and internal information systems. Netdetec The Netdetec product line is based on proprietary 'spider' technologies to quickly gather vast amounts of information from the web and analyse this information for matches on particular words, terms or meanings. In this way the technology can help (amongst others) detect fraud and copyright breaches as well as survey customer opinion of a brand on line. Demand for the top end Netdetec product has remained steady, though the sales cycle for this service remains relatively protracted. Turnover for the period was Â£393,000, this represents a 30% increase after adjusting for the shorter accounting period. We continue to serve several organisations with household names. Search Engine Marketing (SEM) Following the acquisition of Webgravity additional corporate SEM services have been provided. SEM services consist of elements of consultancy, media buying and web based technology. The purpose of these services is to drive targeted traffic from search engines to clients websites. This service is particularly useful to those businesses with a strong online retailing presence. Current clients include low cost airlines who transact the majority of their bookings over the web, online retailers and financial services companies marketing their products over the internet. Recent client wins for this service include Charles Schwabb, WH Smith, Umbro, Teletext, and MORETH>N Insurance, part of the Royal & Sun Alliance Insurance Group PLC. In order to maintain its market edge the company has developed a range of technologies as well as relationships with search engines such as Inktomi (powering portals such as MSN and Netscape), BTLooksmart, Lycos and Google. Corporate SEM revenues in the five months following the acquisition were Â£639,000. SEM tends to be a seasonal or cyclical spend with lower revenues through summer and higher revenues in the second half of the year. WebWurld Webwurld.com was launched in 2001 as the first search engine paid inclusion portal. Webwurld retails inclusion in dozens of search engines around the world and is available in multiple languages and currencies to its worldwide customer base. The Webwurld.com website has shown particularly encouraging growth, with customer levels, average spend per customer, repeat orders and renewals all growing faster than expected. Webwurld revenues for the five months following the acquisition were Â£156,000. The company intends to increase its marketing and development efforts on the Webwurld proposition during the coming year. It is not anticipated that any further material capital expenditure will be necessary for normal trading activities in the foreseeable future. Product development A number of improvements have been made to the Netdetec 2 system to simplify the maintenance of its normal operation. The company has launched a new pay per click management service offering managed search engine marketing campaigns on the new pay per click search engines. We are also launching a 'through to order' tracking system which allows us to maximise return on investment for customers by fully tracking the effectiveness of search engine media spend. Webwurld has launched a high margin 'toolkit' product to allow companies to cheaply track their search engine performance and are the first reseller to retail a paid-for rapid Lycos directory review. The company continually develops focused business solutions based on customer feedback and demand. Prospects Our aim for year 3 is to develop trading on a solid, profitable and cash generative basis Having successfully integrated Webgravity and IBNet Plc, we are continuing to seek ways of maximising return on our core technologies as well as developing other marketable services. We will also continue to actively pursue other organisations with whom we can work for mutual benefit. These may range from agreements to market their products and services, joint ventures or indeed acquisitions or mergers. I would like to thank the executive directors and staff for their enthusiasm and hard work. We all look forward to a successful third year of trading. David Heynes Chairman 27th June 2002 IBNet PLC - Profit and loss account for the period ended 31 March 2002 9 Months To Year To 31 Mar 02 30 Jun 01 NOTES Â£'000 Â£'000 Â£'000 Â£'000 TURNOVER 1 - Continuing activities 393 402 - Acquisition 795 - _______ _______ 1,188 402 COST OF SALES (200) (48) _______ _______ GROSS PROFIT 988 354 ADMINISTRATIVE EXPENSES - Fixed asset impairment - (21,976) - Amortisation of investment 5 (202) - - Other administrative expenses (2,274) (3,008) _______ _______ (2,476) (24,984) _______ _______ OPERATING PROFIT / (LOSS) - Continuing activities (1,670) (24,630) - Acquisition 182 - _______ _______ (1,488) (24,630) Exceptional Item 4 (379) - _______ _______ Loss after exceptional item (1,867) (24,630) NET INTEREST 24 185 _______ _______ LOSS ON ORDINARY ACTIVITIES (1,843) (24,445) TAXATION 2 - - _______ _______ TOTAL LOSS AFTER TAXATION FOR PERIOD (1,843) (24,445) _______ _______ BASIC AND FULLY DILUTED LOSS PER SHARE 3 3.06p 44.48p There were no other recognised gains or losses other than the loss for the period. All operations are continuing. The accompanying accounting policies and notes form part of these financial statements. IBNet PLC - Balance Sheet as at 31 March 2002 AS AT AS AT 31 Mar 02 30 Jun 01 NOTES Â£'000 Â£'000 Â£'000 Â£'000 FIXED ASSETS Investments 5 2,221 - Tangible fixed assets 456 449 _______ _______ 2,677 449 CURRENT ASSETS Investments recoverable after one year 450 - Debtors recoverable within one year 623 253 Cash at bank and in hand 43 2,041 _______ _______ 1,116 2,294 CURRENT LIABILITIES Creditors: - Amounts falling due within one year (1,011) (426) Net current assets 105 1,868 _______ _______ Total assets less current liabilities 2,782 2,317 Creditors: - Amounts falling due after more than one (583) - year Provision for liabilities and charges (773) - _______ _______ 1,426 2,317 _______ _______ CAPITAL AND RESERVES Called up share capital 13,938 13,738 Share premium account 14,371 13,619 _______ _______ 28,309 27,357 Profit and loss account (26,883) (25,040) _______ _______ Equity shareholders' funds 1,426 2,317 _______ _______ The financial statements were approved by the board of directors and signed on their behalf on 27th June 2002. T. J. Smallpeice Director IBNet PLC - Cash Flow Statement For the period ended 31 March 2002 9 Months To Year To 31 Mar 02 30 Jun 01 NOTES Â£'000 Â£'000 Â£'000 Â£'000 Net cash outflow from operating 6 (1,282) (1,890) activities Returns on investments and servicing of finance Interest received 34 185 Interest paid (10) - _______ _______ 24 185 Capital expenditure and financial investments Purchase of tangible fixed assets (163) (298) Purchase of current asset investment (450) - Purchase of investment in subsidiary (73) - undertaking _______ _______ (686) (298) _______ _______ Net cash outflow before financing (1,944) (2,003) Management of liquid resources Cash placed on fixed term deposits - 2,300 Sale of short term investments 1,700 - _______ _______ 1,700 2,300 Financing Capital element of finance lease rentals (6) - Expenses paid in connection with share (48) - issues _______ _______ (54) - _______ _______ (Decrease)/increase in cash 8 (298) 297 _______ _______ IBNet PLC - Notes to the financial statements for the period 31 March 2002 1. TURNOVER AND LOSS ON ORDINARY ACTIVITIES BEFORE TAX The turnover is attributable to the principal activities, which are carried out in the United Kingdom and Europe. The loss on ordinary activities before taxation is stated after charging: 9 Months To Year To 31 Mar 02 30 Jun 01 Â£'000 Â£'000 Â£'000 Â£'000 Auditors Remuneration - Audit services 20 16 - Non audit services 3 5 _______ _______ 23 21 Operating lease rentals land and buildings 50 37 Depreciation and amortisation - Tangible fixed assets owned 144 115 - Tangible fixed assets held under hire purchase 5 - contracts - Investment amortisation 202 - _______ _______ 351 115 Fixed asset investment: impairment loss - 21,976 Amounts provided against amounts receivable from subsidiary undertaking - 564 2. TAXATION There are tax losses of approximately Â£4,728,000 (2001: Â£3,300,000) to carry forward and use against future profits of the same trade. Should suitable taxable profits arise, these losses would represent a deferred tax asset of approximately Â£1,418,400 (2001: Â£990,000) at a corporation tax rate of 30%. There is no tax charge or credit for the period. 3. LOSS PER SHARE The calculation for the basic loss per share is based upon the loss attributable to ordinary shareholders divided by the weighted average number of shares on issue during the period. Reconciliation of the loss and weighted average number of shares used in the calculations are set out below: 9 Months To Year To 31 Mar 02 30 Jun 01 Loss on ordinary activities before tax (Â£'000) (1,843) (24,445) Weighted average number of shares 60,226,725 54,952,000 Amount of loss per share in pence 3.06p 44.48p 4. EXCEPTIONAL ITEM The exceptional item represents the costs of restructuring the business following the acquisition of Webgravity as regards redundancies and the closure of operations in Egham and their relocation to Chiswick. 5. FIXED ASSET INVESTMENT Subsidiary undertaking Amortisation / Impairment losses Cost Net book value Â£'000 Â£'000 Â£'000 As at 1 July 2001 21,976 (21,976) - Additions 2,423 - 2,423 Charge for the period - (202) (202) _______ _______ _______ As at 31 March 2002 24,399 (22,178) 2,221 _______ _______ _______ On 31 October 2001, the company acquired the entire share capital of Webgravity Limited for a consideration of Â£2,423,000, including Â£450,000 loan notes, the issue of 20 million ordinary shares of 1 pence each and further loan notes estimated to amount to Â£900,000 subject to a maximum of Â£2,550,000. This contingent consideration is dependant upon the future performance of the business during an earn-out period up to and including August 2003. As at 31 March 2002 the undertakings in which the company held 20% or more of the share capital were: Country of Class of shares held Proportion held Nature of incorporation business Name of undertaking IBNet (UK) Limited England and Wales Ordinary 100% Dormant Webgravity Limited England and Wales Ordinary 100% Dormant IBNet (UK) Limited was dormant throughout the period, and Webgravity Limited became dormant from 1 November 2001, at which date the trading activities were transferred to IBNet plc. 6. NET CASH OUTFLOW FROM OPERATING ACTIVITIES As at As at 31 Mar 02 30 Jun 01 Â£'000 Â£'000 Operating loss (1,488) (24,630) Depreciation 149 115 Fixed asset investment amortisation/ 202 21,976 impairment Loss on sale of fixed assets 26 - Exceptional item associated with purchase of (379) - subsidiary undertaking (Increase) / Decrease in debtors (370) 539 Increase in creditors 578 110 _______ _______ Net cash flow from operating activities (1,282) (1,890) _______ _______ 7. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS / (NET DEBT) 9 Months to Year to 31 Mar 02 30 Jun 01 Â£'000 Â£'000 (Decrease)/increase in cash in the period (298) 297 Cash inflow from decrease in liquid resources (1,700) (2,300) Cash inflow from debt and leasing financing 6 - _______ _______ Change in net debt resulting from cash flows (1,992) (2,003) Loan notes issued and due for issue (900) - Inception of finance leases (19) - _______ _______ Change in net debt during the period (2,911) (2,003) Net funds as at 1 July 2001 2,041 4,044 _______ _______ Net (debt)/funds as at 31 March 2002 (870) 2,041 _______ _______ 8. ANALAYSIS OF CHANGES IN NET FUNDS/(DEBTS) As at Non Cash As at 1Jul 01 Cash flow Items 31 Mar 02 Â£'000 Â£'000 Â£'000 Â£'000 Cash in hand and at bank 341 (298) - 43 Cash deposit 1,700 (1,700) - - _______ _______ _______ _______ 2,041 (1,998) - 43 Debt - - (900) (900) Finance leases - 6 (19) (13) _______ _______ _______ _______ Net funds/(net debt) 2,041 (1,992) (919) (870) _______ _______ _______ _______ 9. NATURE OF THE FINANCIAL INFORMATION The foregoing financial information does not amount to full accounts within the meanings of Section 240 of the Companies Act 1985. The financial information has been extracted from the companies Annual Report & Accounts for the 9 month period ended 31 March 2002, upon which the auditors have given an unqualified report. Copies of the Annual Report & Accounts will be posted to shareholders shortly and will be available from the Company's Website and the Company's registered office at Hogarth Centre, Hogarth Lane, Chiswick, W4 2QN. Websites www.ibnetplc.com www.webwurld.com This information is provided by RNS The company news service from the London Stock Exchange

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