Final Results
Eckoh Technologies PLC
30 May 2002
For Immediate Release 30 May 2002
Eckoh Technologies plc (formerly 365 Corporation plc)
Fourth Quarter and Full Year Results
Preliminary announcement
"Voice Technology for People"
Highlights of the Year Year Year
Continuing Discontinued ended ended
operations operations 31 March 31 March
2002 2002 2002 2001
£'000 £'000 £'000 £'000
Turnover 45,499 9,421 54,920 50,142
Gross profit 14,117 3,481 17,598 19,169
Operating loss before intangible asset amortisation and (3,035) (8,722) (11,757) (16,703)
impairment and exceptional items
Operating loss (12,151) (22,591) (34,742) (47,467)
Cash and liquid reserves 14,100 25,952
Quarterly Financial Performance Quarterended Quarter Quarterended Quarter Quarter
31 Mar ended 30 Sep ended ended
2001 30 Jun 2001 31 Dec 31 Mar
2001 2001 2002
Revenue - continuing operations (£'000) 10,274 10,778 11,013 11,297 12,411
Total operating costs* as a percentage of 77.7% 63.4% 55.9% 47.5% 46.5%
total revenue
Cash and liquid resource outflows (£'000) 5,447 4,548 3,513 2,549 1,242
For further enquiries, please contact
Eckoh Technologies plc
Martin Turner, Chief Executive Officer
Nik Philpot, Chief Operating Officer
www.eckoh.com Tel: 01442 458 355
Buchanan Communications
Mark Edwards/Bobby Morse Tel: 020 7466 5000
Twelve months ended 31 March 2002
• Successful launch of Speech Solutions business
• Turnover from continuing operations up 26.5% to £45.5m
• Operating losses from continuing operations of £3.0m* (2001 -
£5.4m*)
• Exit from internet activities during December 2001
• Total operating losses of £11.8m (2001 - £16.7m) before
intangible asset amortisation and impairment and exceptional
items totalling £23.0m (2001 - £30.8m)
Fourth quarter ended 31 March 2002
• Turnover from continuing operations of £12.4m (2001 - £10.3m)
• Operating losses from continuing operations of £1.1m* (2001 -
£2.3m*)
• Total operating losses of £6.5m (2001 - £18.8m)
• Fully funded with £14.1m of cash and short-term investments as
at 31 March 2002 (before payment of restructuring charges and
contingent consideration totalling £2.5m)
Current Developments
• Strategic focus on Speech Solutions
• Exit from Hardware Services on 28 April 2002
• Completion of restructuring
• 2 year contract with Virgin Mobile to build and host a mobile
email service
• Change of name to Eckoh Technologies plc on 21 May 2002
• Operations consolidated into one integrated business
* before intangible asset amortisation and impairment and exceptional items.
Martin Turner, Chief Executive Officer, commented today:
"The past year has been one of significant change and progress. Our change of
name to Eckoh Technologies plc on 21 May 2002 signalled the completion of a
major restructuring and cost reduction program, and our emergence as a leading
European Speech Applications Service Provider. Annual turnover from continuing
operations rose by 26.5% to £45.5m.
Following the disposal of our Hardware Services business on 28 April 2002, we
now operate as a unified, fully integrated business and expect to see further
financial benefits from this in future periods as we streamline our business and
gain operational efficiencies.
Our prime focus moving forward is to exploit the anticipated growth in demand
for Speech Solutions, which we design, build and host on behalf of large
corporations and organisations. We believe that the market for these new
services will continue to grow strongly over the next five years, and that Eckoh
Technologies is uniquely positioned to take advantage of this exciting
opportunity."
Operating and Financial Review
Consumer Division
Continuing Operations
Eckoh Technology plc's ("Eckoh") continuing Consumer operations include its
established Interactive Voice Recognition ("IVR", or "audiotext") business,
growing Speech Solutions business and mobile telephone dealer business ("Phones
Express"). Following completion of the restructuring of the Company announced
on 28 April 2002, Eckoh now operates a single integrated business, which
includes the former Business Division's Network Services operation, and has
dispensed with a "divisional" organisational structure.
Eckoh's IVR business is one of the largest in the UK and has been profitable and
cash generative for a number of years. It earns commissions from fixed-line
telecom carriers by driving customer traffic via premium-rate telephone numbers
to entertainment content (such as horoscopes, dating services, advice lines and
competitions), either by directly marketing to consumers on television or in
print media, or by partnering with media clients to provide them with
own-branded premium-rate services on a revenue share basis.
The Speech Solutions business sells directly to large corporations or
organisations looking to significantly reduce call centre costs, create
competitive market advantages through innovative interaction with their
customers, or implement value added applications to drive incremental revenue.
Industry sectors include telecoms, banking, travel and tourism, call centre
outsourcing, entertainment and utilities.
Phones Express was acquired in September 2000 and markets mobile telephone
handsets and airtime packages directly to consumers in specialist print media,
and more recently on shopping and auction channels on Sky Digital. It earns
one-time connection commissions and bonuses from mobile phone service providers
for new airtime contracts and, unlike the Business Division's mobile customers,
has no ongoing relationship with its customers for airtime service.
In late June 2001 the Company successfully launched its voice portal, Eckoh,
which marked the culmination of twelve months of design and technical
development in partnership with Philips, Cable & Wireless and Sonexis.
Originally developed as a consumer product, the Eckoh-branded voice portal now
doubles as a "shop window" for the Company's technical capabilities and a speech
product in its own right that has since been syndicated to Virgin Mobile. Using
simple voice commands, individuals can access a full range of customisable
communication, commerce and content services from any fixed line or mobile
phone, using speech recognition technology as the primary interface.
Turnover from continuing Consumer operations includes revenue from IVR, Speech
Solutions and Phones Express. For the year ended 31 March 2002 this totalled
£27.1m, compared to £22.9m for the prior year - an increase of 18%.
IVR turnover is generated when users access the Company's call-processing
platform using a fixed line or mobile telephone, and represents a share of the
access revenue from the associated telephone call. Calls are routed to the
platform using non-geographic number ranges that are charged to the caller at
pre-determined "premium" rates, and the Company generates revenue by negotiating
a share of the associated call revenue with the relevant telephone carrier.
Eckoh also offers freephone (such as 0800) access to audio content on a
subscription basis, whereby users are directly billed using credit and debit
cards as the means of payment. Turnover from Speech Solutions consists of
set-up costs, monthly maintenance fees, per port or per minute charges and, in
most cases, a share of dial-up access charges by end-users. Phones Express'
turnover represents connection commissions and the sale of handsets and
accessories directly to consumers.
Cost of sales relates primarily to the direct costs of advertising IVR services
in a variety of media, freephone (0800) access charges and commissions or
royalties payable to third parties. Continuing Consumer cost of sales for the
year ended 31 March 2002 rose to £18.0m (2001 - £16.0m). Gross profit as a
percentage of turnover increased to 33.6% for the year ended 31 March 2002 from
30.1%, mainly as a result of reduced media advertising costs and higher margin
Speech Solutions business. However IVR gross margins are reducing, due to
increased competition for IVR services provided to third parties.
Continuing administrative expenses (before intangible asset amortisation and
impairment and exceptional items) increased to £8.4m during the year ended 31
March 2002 (2001 - £6.0m) as the Company expanded its Speech Solutions
operation.
Continuing Consumer operations generated an operating profit (before intangible
asset amortisation and impairment and exceptional items) of £0.6m for the full
year (2001 - £1.0m), which included significant start up costs relating to the
development and expansion of its Speech Solutions business.
During the fourth quarter, continuing Consumer operations generated turnover of
£7.5m (2001 - £6.4m), a 32.3% gross margin (2001 - 21.1%) and £0.1m of operating
profit (before intangible asset amortisation and impairment and exceptional
items) (2001 - loss £0.6m).
During the year continuing Consumer operations generated 56.7 million minutes**
of voice traffic (2001 - 76.3 million) from its own-brand IVR products. The
decrease in own-brand traffic from last year is as a result of the migration of
callers to higher priced tariffs and the reduced need to promote free trial
minutes, which has been offset by an increase in bureau-related traffic which is
excluded from the figures quoted above.
** as defined in note 2 to the Fourth Quarter and Full Year Results.
Discontinued Operations
On 21 December 2001, Eckoh and Chrysalis Group plc ("Chrysalis") completed the
sale and transfer of their respective internet content businesses and related
assets to Rivals Digital Media Limited ("Rivals"). The merged business provides
its large audience with access to a broad, fan-based sports network and premium
sports content. Following completion of the transaction, the Company retains a
40% minority interest in Rivals. The remaining shares are owned by Chrysalis
(40%) and by Rivals' management (20%). The investment is being treated as a
trade investment as Eckoh does not have significant influence over the
operations or management of the new business.
Operating funds of £2.0m were jointly provided to Rivals by Eckoh (£0.7m) and
Chrysalis (£1.3m) and are considered sufficient to support Rivals' operations
for the next eighteen months. In addition, each party will make available a
further £0.25m, if necessary, to Rivals for future acquisitions. Neither the
Company nor Chrysalis will have further funding obligations to Rivals beyond
these investments.
The closures of Eckoh's television and broadband departments were also completed
during December 2001.
During the year, discontinued operations generated turnover of £3.4m (2001 -
£6.3m) and incurred an operating loss (before intangible asset amortisation and
impairment and exceptional items) of £4.2m (2001 - £9.4m). The profit on
disposal of the internet operations of £0.5m has been disclosed as an
exceptional item.
Business Division
Continuing Operations
The Business Division was established in 1997 and is a reseller of fixed line,
mobile and data network services ("Network Services") to the small and
medium-sized business ("SME") market in the UK and Ireland. On 28 April 2002
Eckoh sold its loss-making Hardware Services business and the retained Network
Services business has since been integrated with the Consumer Division's
continuing operations.
Network Services purchases network access from a number of alternative fixed
line telecommunications carriers (primarily Energis and Worldcom) under
wholesale supply agreements, and resells to SMEs at retail prices under the "
Symphony" brand. It provides mobile telephony services, supplying handsets,
accessories and airtime through wholesale supply agreements with both Vodafone
and BT Cellnet, which cover future migration to GPRS and 3G Networks. It also
has negotiated exclusive wholesale rights with Samsung and Inter-Tel for the
distribution of telephone systems in Ireland, which are sold through an indirect
dealer channel together with fixed line resale.
Network Services has a distribution network focused on resellers of telephone
systems and the Company's sales approach is based on the principle that
telephone systems suppliers to the SME market typically control the supply of
network services. The distribution network - comprising direct sales,
telesales, 50%-owned joint ventures and telephone systems dealers - has
nationwide coverage, with a particular focus on South East England.
The operation has been relocated to Eckoh's recently expanded head office at
Telford House in Hemel Hempstead, together with 34 employees to be retained in
sales, customer care and billing.
Turnover includes revenue generated by the Company's wholly-owned Network
Services subsidiaries and remaining six 50%-owned joint ventures which are fully
consolidated in the Company's financial statements in accordance with UK GAAP.
During the year ended 31 March 2002, Network Services generated turnover of
£18.4m, an increase of 41.2% from last year (2001 - £13.0m).
Cost of sales includes costs relating to fixed line access charges; mobile
handsets and airtime charges; and data service costs. Cost of sales for the year
ended 31 March 2002 was £13.3m (2001 - £9.6m), and gross profit as a percentage
of turnover improved to 27.5% compared to 26.1% for the prior year.
Administrative expenses (before intangible asset amortisation and impairment and
exceptional items) include all costs related to the Business Division's
infrastructure, customer services, sales and marketing expenses, general
operating expenses and personnel. Administrative costs decreased to £5.8m for
the year ended 31 March 2002 compared to £5.9m for the prior year. These costs
are expected to significantly reduce in future periods following the
restructuring of the operation, reduction of the cost base and integration into
the continuing operations of the Company.
Network Services operating losses (before intangible asset amortisation and
impairment and exceptional items) for the year ended 31 March 2002 were £0.7m
(2001 - £2.5m).
Minority interests represent the interests of Eckoh's joint venture partners in
the profit or loss of each joint venture company during the relevant accounting
period. Minority interests are computed with reference to shares owned by the
joint venture partners. In respect of each joint venture company, the Company
owns at least 50% of the voting shares and fully consolidates the joint venture
companies. As at 31 March 2002, there were 6 active joint ventures (2001 - 7).
Network Services generated £4.9m turnover (2001 - £3.9m), 28.9% gross margin
(2001 - 24.6%) and £0.2m operating losses (before intangible asset amortisation
and impairment and exceptional items) (2001 - £0.5m), during the fourth quarter.
Network Services customers** increased by 17.0% during the year to 31 March
2002, from 5,159 in March 2001 to 6,035 at the year end.
** as defined in note 2 to the Fourth Quarter and Full Year Results.
Discontinued Operations
During 2000 the Business Division acquired a number of complementary telephone
systems dealers to form its Hardware Services business. The acquired businesses
included Fenfones Communications Limited, Compass Communications Technical
Services Limited, Systematic Telecoms Limited and the trade and assets of RBC
Services Limited and the Essential Voice and Data partnership. Since acquiring
these businesses the Business Division successfully sold its network services
into the underlying customer bases.
However, the Hardware Services business performed poorly during 2001 due to
adverse market conditions and competitive pressures, despite management changes
and a significant reduction in operating costs. During the year to 31 March
2002 86.3% of the Business Division's operating losses (before intangible asset
amortisation and impairment and exceptional items) were attributable to Hardware
Services and on 28 April 2002 the assets of the Hardware Services business were
sold to three members of its management team. As part of the terms of the
agreements with the purchasers they entered into long-term, exclusive
distribution contracts with the Company for the supply of Network Services to
both their acquired and new customers. Following the completion of this
transaction the Company is no longer engaged in the direct provision of
telephone systems to end-users in the United Kingdom. The wholesale hardware
operation in Ireland is unaffected by this disposal.
During the year, turnover from Hardware Services was £6.0m (2001 - £7.9m) the
operating loss (before intangible asset amortisation and impairment and
exceptional items) was £4.5m (2001 - £1.9m).
Corporate
Corporate overheads (excluding exceptional items) for the year were £2.9m (2001
- £3.8m).
In March 2002 Ian Martin expressed his intention to stand down as a director and
Chairman of Eckoh in October of this year. During his three-year tenure, Ian
has seen the Company through its flotation and its successful turnaround into a
leading Speech Applications Service Provider. A search by the Nominations
Committee for his successor is underway.
On 4 March 2002 Eckoh announced it had decided not to pursue discussions with
Convergent Communications plc regarding a possible sale of the Business
Division. Costs of £0.6m were incurred in respect of these discussions, which
are classified as an exceptional item.
Intangible asset amortisation totalled £7.8m for the year (2001 - £25.6m) and
has been charged to the profit and loss account. Following an impairment review
of acquisitions made during the previous financial year, impairment write-downs
totalling £8.6m (2001 - £5.9m) have been recorded. This mainly reflects the fall
in market valuations in the telecommunications sector.
Net interest income for the year to 31 March 2002 was £0.8m, compared to £2.4m
for the prior year. The decrease is due to the reduction of cash and short-term
deposit balances and lower interest rates.
Eckoh has incurred a cumulative net loss since inception. Due to the uncertainty
surrounding the future benefits of the net tax losses carried forward, the
Company has not recognised a deferred tax asset.
The Company recorded a consolidated loss for the year of £33.6m (2001 - £45.0m),
or 16.5p per share for the year ended 31 March 2002 (2001 - 22.5p). Excluding
the effect of intangible asset amortisation and impairment, exceptional items
and the profit on disposal of internet operations, the loss for the year ended
31 March 2002 was £11.1m compared to £14.3m for the year ended 31 March 2001.
Eckoh has never paid or declared a dividend.
During the year ended 31 March 2002, the Company's operating activities used
cash totalling £9.2m (2001 - £20.1m), primarily due to operating losses, but
offset by decreases in working capital.
Capital expenditure and financial investment during the year totalled £2.1m
(2001 - £2.1m). £1.5m related to the purchase of telecommunications and
computer equipment to expand the Company's call-processing platform and related
infrastructure and £0.7m of operating funds were provided to Rivals as part of
the transaction with Chysalis.
Deferred and contingent cash consideration totalling £1.1m was paid during the
year in respect of acquisitions made during the previous year. In April 2002 a
final cash payment of £0.5m was made in respect of the acquisition of Teletalk.
The Company has no significant bank lending facilities, borrowings (except for
finance leases or hire purchase agreements) or lines of credit. Principal
commitments relate to annual obligations under property and vehicles leases,
which totalled £0.4m as at 31 March 2002.
Eckoh remains in a strong financial position with cash reserves of £14.1m as at
31 March 2002 (before payment of restructuring charges and contingent
consideration totalling £2.5m), and continues to reduce its operating cash
consumption. The cash and liquid resource outflows reduced from £2.5m in the
third quarter to £1.2m in the fourth quarter, as a result of improved working
capital management and reduced operating losses. Net current assets less
long-term liabilities were £9.0m as at 31 March 2002 (2001 - £26.1m).
During the fourth quarter, corporate administrative expenses of £0.9m (2001 -
£1.1m) and intangible asset amortisation and impairment totalling £1.2m (2001 -
£12.3m) were incurred.
Restructuring Charges
During the year to 31 March 2002, the Company has incurred significant costs,
disclosed as 'exceptional items', in connection with its restructuring, closure
of loss-making or non-core activities, and disposal of its internet content and
Hardware Services businesses. In addition, operations have been streamlined and
the Company now operates a fully integrated business from one primary location
in Hemel Hempstead. A large element of the restructuring charges over the past
twelve months relate to redundancy and related costs which were incurred as our
workforce reduced from approximately 600 to its current level of 215 as at 30
April 2002.
Current Trading
Fourth Quarter operating losses (before intangible asset amortisation and
impairment and exceptional items) from continuing operations totalled £1.1m,
which includes corporate costs of £0.9m. These corporate costs are expected to
reduce significantly in future periods following completion of the Company's
restructuring program, which includes a planned reduction in corporate
headcount. In addition, Eckoh also expects to realise further financial
benefits from the integration of its continuing operations moving forward.
The Company continues to expand its Speech Solutions activities through new
product development, new contracts, and discussions with a number of new
prospective clients. The Directors are confident that the market for Speech
Solutions will continue to grow strongly, and that Eckoh is uniquely positioned
to take advantage of this opportunity.
Consolidated profit and loss account
for the quarter and year ended 31 March 2002
Quarter Quarter Year ended Year ended
ended ended 31 March 31 March
31 March 31 March 2002 2001
2002 2001 unaudited audited &
unaudited unaudited restated
& restated
Note £'000 £'000 £'000 £'000
Turnover 3;4 13,244 14,527 54,920 50,142
Continuing operations 12,411 10,274 45,499 35,960
Discontinued operations 833 4,253 9,421 14,182
Cost of sales (9,229) (9,703) (37,322) (30,973)
Gross profit 4,015 4,824 17,598 19,169
Administrative expenses before intangible 1 6,159 11,282 29,355 35,872
asset amortisation and impairment and
exceptional items
Amortisation of intangible assets 1 779 6,442 7,847 25,556
Impairment of intangible assets 438 5,900 8,643 5,900
Exceptional items 3,154 (26) 6,495 (692)
Total administrative expenses 10,530 23,598 52,340 66,636
Operating loss before intangible asset 3;4 (2,144) (6,458) (11,757) (16,703)
amortisation and impairment and exceptional
items
Continuing operations (1,054) (2,259) (3,035) (5,355)
Discontinued operations (1,090) (4,199) (8,722) (11,348)
Operating loss (6,515) (18,774) (34,742) (47,467)
Continuing operations (3,684) (3,529) (12,151) (9,283)
Discontinued operations (2,831) (15,245) (22,591) (38,184)
Profit on disposal of internet operations 187 - 490 -
Net interest receivable 139 382 792 2,365
Loss on ordinary activities before taxation (6,189) (18,392) (33,460) (45,102)
Taxation 54 10 60 (16)
Loss on ordinary activities after taxation (6,135) (18,382) (33,400) (45,118)
Minority interests (31) 32 (163) 78
Loss for the period (6,166) (18,350) (33,563) (45,040)
Loss per ordinary share 5
Basic and diluted loss per share (3.0p) (9.1p) (16.5p) (22.5p)
Basic and diluted loss per share before 1 (1.0p) (3.0p) (5.5p) (7.1p)
intangible asset amortisation and
impairment, exceptional items and profit on
disposal of internet operations
Statement of total recognised gains and losses
for the quarter and year ended 31 March 2002
Quarter Quarter Year ended Year ended
ended ended 31 March 31 March
31 March 31 March 2002 2001
2002 2001 unaudited audited
unaudited unaudited
Note £'000 £'000 £'000 £'000
Loss for the period (6,166) (18,350) (33,563) (45,040)
Exchange adjustments offset in reserves 35 (115) 74 (120)
Total recognised losses for the period (6,131) (18,465) (33,489) (45,160)
Prior year adjustment 1,992
Total recognised losses since last (43,168)
period
Consolidated balance sheet
as at 31 March 2002
31 March 31 March
2002 2001
restated
unaudited audited
Note £'000 £'000
Fixed assets
Intangible fixed assets 7,376 24,985
Tangible fixed assets 2,316 3,179
Investment 2,000 -
11,692 28,164
Current assets
Stock 501 1,401
Debtors 9,554 14,566
Investments - short term deposits 10,500 24,250
Cash at bank and in hand 3,600 1,702
24,155 41,919
Creditors: amounts falling due within one year (12,613) (12,205)
Net current assets 11,542 29,714
Total assets less current liabilities 23,234 57,878
Creditors: amounts falling due after more than one year (57) (279)
Provisions for liabilities and charges (2,472) (3,371)
Net assets 20,705 54,228
Capital and reserves 6
Called up share capital 515 505
Shares to be issued 253 752
Share premium account 72,429 72,425
Merger reserve 2,973 9,473
Profit and loss account (55,494) (28,793)
Total equity shareholders' funds 7 20,676 54,362
Minority interests 29 (134)
Capital employed 20,705 54,228
Consolidated cash flow statement
for the quarter and year ended 31 March 2002
Quarter Quarter Year Year
ended ended ended ended
31 March 31 March 31 March 31 March
2002 2001 2002 2001
unaudited unaudited unaudited audited
£'000 £'000 £'000 £'000
Note
Net cash outflow from operating activities 8 (120) (5,828) (9,203) (20,052)
Return on investments and servicing of
finance
Net interest 189 627 916 2,679
Taxation (217) 67 (217) (5)
Capital expenditure and financial
investment
Purchase of tangible fixed assets (538) (588) (1,160) (2,205)
Purchase of intangible fixed assets - (213) - (213)
Proceeds from sale of tangible fixed 54 47 54 47
assets
Proceeds from sale of intangible asset - 312 - 312
Purchase of trade investment - - (670) -
(484) (442) (1,776) (2,059)
Acquisitions and disposals
Net cash acquired with subsidiary - - - 392
undertakings
Purchase of subsidiary undertakings - 129 - (6,661)
Purchase of business trade and assets - - - (914)
Consideration paid in respect of prior (248) - (1,120) -
period acquisitions
Net cash disposed of with subsidiary (71) - (71) -
undertakings
Costs relating to the disposal of internet (212) - (212) -
operations
(531) 129 (1,403) (7,183)
Cash outflow before use of liquid (1,163) (5,447) (11,683) (26,620)
resources and financing
Management of liquid resources
Decrease in short-term investments 2,088 4,218 13,750 25,250
Financing
Issue of shares 6 32 6 46
Capital element of finance lease payments (85) (32) (175) (107)
(79) - (169) (61)
Increase/(decrease) in cash in the period 846 (1,229) 1,898 (1,431)
Notes to the fourth quarter and full year results
1. Basis of preparation
The financial statements for the quarter and year ended 31 March 2002 have been
prepared using accounting policies consistent with those set out in the
Company's consolidated 2001 statutory accounts except as described below. 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 year ended 31 March 2002 has been
extracted from the accounting records of the Group.
The balances and results as at 31 March 2001 have been extracted from the
statutory accounts, which have been filed with the Registrar of Companies. The
auditors' report on those accounts was unqualified and did not contain any
statement under section 237 of the Companies Act 1985.
The Group has adopted FRS19 'Deferred Taxation' this year. This has required a
change in accounting policy. The change does not have a material impact on the
deferred taxation position of the Group or the Company at 31 March 2001 and,
accordingly, no restatement of the comparative results for 2001 has been made.
FRS18 'Accounting Policies' has also been adopted by the Group. This has not
required any change in accounting policy by the Group or Company.
There has been a prior year adjustment in respect of the merger reserve.
Following the amortisation and impairment of the goodwill relating to
investments which gave rise to the merger reserve, an amount has been
transferred to the profit and loss account. The amount transferred from the
merger reserve is based on the percentage of related goodwill amortised or
impaired to date. This has resulted in the transfer of £29.063m from the merger
reserve to the profit and loss account in the prior year.
In addition, prior periods' results have been reclassified. Amortisation of
goodwill and impairment of goodwill have been expanded to include amortisation
and impairment of other intangible assets.
Neither change has resulted in a charge to the profit and loss account in either
year.
The results for the quarter and the preliminary results for the year ended 31
March 2002 were approved by the Board on 30 May 2002 and will be posted on the
Company's web site, www.eckoh.com, on 30 May 2002.
2. Operating data
Reference is made to minutes and customers in the quarterly results. Eckoh
defines these as follows:
The number of voice services minutes is defined as the number of minutes
recorded by Eckoh and its carriers in respect of calls to Eckoh's voice
services.
The number of business customers at each month end is defined as the total
number of customers at that month end who have been billed for that month.
3. Segmental analysis - for the quarter ended 31 March 2002
Turnover and loss before taxation are classified below by class of business.
Segmental information by geographical area is given by origin, which is not
materially different from geographical area by destination.
Consumer Division Business Division Group Overhead Total Group
Business Analysis (£'000) Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
ended ended ended ended ended ended ended ended
31 Mar 31 Mar 31 Mar 31 Mar 31 Mar 31 Mar 31 Mar 31 Mar
2002 2001 2002 2001 2002 2001 2002 2001
Turnover 7,482 7,753 5,762 6,774 - - 13,244 14,527
Continuing operations 7,482 6,389 4,929 3,885 - - 12,411 10,274
Discontinued operations - 1,364 833 2,889 - - 833 4,253
Cost of sales 5,068 5,188 4,161 4,515 - - 9,229 9,703
Gross profit 2,414 2,565 1,601 2,259 - - 4,015 4,824
Administrative expenses before 2,534 6,185 2,723 3,969 902 1,128 6,159 11,282
intangible asset amortisation and
impairment and exceptional items
Operating (loss)/profit before (120) (3,620) (1,122) (1,710) (902) (1,128) (2,144) (6,458)
intangible asset amortisation and
impairment and exceptional items
Continuing operations 97 (610) (249) (521) (902) (1,128) (1,054) (2,259)
Discontinued operations (217) (3,010) (873) (1,189) - - (1,090) (4,199)
Intangible asset amortisation and 850 11,779 367 563 - - 1,217 12,342
impairment
Exceptional items 285 (5) 2,093 (5) 776 (16) 3,154 (26)
Operating loss (1,255) (15,394) (3,582) (2,268) (1,678) (1,112) (6,515) (18,774)
Continuing operations (753) (1,587) (1,253) (830) (1,678) (1,112) (3,684) (3,529)
Discontinued operations (502) (13,807) (2,329) (1,438) - - (2,831) (15,245)
Profit on disposal of internet 187 - - - - - 187 -
operations
Net interest receivable 24 6 - 4 115 372 139 382
Loss on ordinary activities before (1,044) (15,388) (3,582) (2,264) (1,563) (740) (6,189) (18,392)
taxation
Geographical analysis (£'000) Turnover Operating loss before
intangible asset
amortisation and
impairment and
exceptional items
Quarter Quarter Quarter Quarter
ended ended ended ended
31 Mar 31 Mar 31 Mar 31 Mar
2002 2001 2002 2001
Continuing operations
United Kingdom and Ireland 12,384 10,262 (904) (2,028)
France 27 12 (150) (231)
12,411 10,274 (1,054) (2,259)
Discontinued operations
United Kingdom and Ireland 833 3,969 (1,090) (3,886)
France - 65 - (174)
Germany - - - (2)
Chile - 74 - (15)
South Africa - 29 - (82)
USA - 116 - (40)
833 4,253 (1,090) (4,199)
13,244 14,527 (2,144) (6,458)
4. Segmental analysis - for the year ended 31 March 2002
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 Group Overhead Total Group
Division
Business Analysis (£'000) Year Year Year Year Year Year Year Year
ended ended ended ended ended ended ended ended
31 Mar 31 Mar 31 Mar 31 Mar 31 Mar 31 Mar 31 Mar 31 Mar
2002 2001 2002 2001 2002 2001 2002 2001
Turnover 30,497 29,181 24,423 20,961 - - 54,920 50,142
Continuing operations 27,090 22,923 18,409 13,037 - - 45,499 35,960
Discontinued operations 3,407 6,258 6,014 7,924 - - 9,421 14,182
Cost of sales 18,782 17,001 18,540 13,972 - - 37,322 30,973
Gross profit 11,715 12,180 5,883 6,989 - - 17,598 19,169
Administrative expenses before 15,278 20,600 11,149 11,427 2,928 3,845 29,355 35,872
intangible asset amortisation and
impairment and exceptional items
Operating (loss)/profit before (3,563) (8,420) (5,266) (4,438) (2,928) (3,845) (11,757) (16,703)
intangible asset amortisation and
impairment and exceptional items
Continuing operations 617 981 (724) (2,491) (2,928) (3,845) (3,035) (5,355)
Discontinued operations (4,180) (9,401) (4,542) (1,947) - - (8,722) (11,348)
Intangible asset amortisation and 6,498 29,335 9,992 2,121 - - 16,490 31,456
impairment
Exceptional items 1,224 (181) 3,632 (164) 1,639 (347) 6,495 (692)
Operating loss (11,285) (37,574) (18,890) (6,395) (4,567) (3,498) (34,742) (47,467)
Continuing operations (3,531) (2,518) (4,053) (3,267) (4,567) (3,498) (12,151) (9,283)
Discontinued operations (7,754) (35,056) (14,837) (3,128) - - (22,591) (38,184)
Profit on disposal of internet 490 - - - - - 490 -
operations
Net interest receivable/(payable) 29 11 (8) 82 771 2,272 792 2,365
Loss on ordinary activities before (10,766) (37,563) (18,898) (6,313) (3,796) (1,226) (33,460) (45,102)
taxation
Geographical analysis (£'000) Turnover Operating loss before
intangible asset
amortisation and
impairment and
exceptional items
Year Year Year Year
ended ended ended ended
31 Mar 31 Mar 31 Mar 31 Mar
2002 2001 2002 2001
Continuing operations
United Kingdom and Ireland 45,390 35,890 (2,400) (4,589)
France 109 70 (635) (766)
45,499 35,960 (3,035) (5,355)
Discontinued operations
United Kingdom and Ireland 8,756 13,351 (8,424) (8,986)
France - 265 - (1,316)
Germany - - - (25)
Chile 91 210 - (74)
South Africa 153 78 (135) (524)
USA 421 278 (163) (423)
9,421 14,182 (8,722) (11,348)
54,920 50,142 (11,757) (16,703)
5. Loss per ordinary share of 0.25p each
Quarter Quarter Year Year
ended ended ended ended
31 Mar 31 Mar 31 Mar 31 Mar
2002 2001 2002 2001
restated
£'000 £'000 £'000 £'000
Loss for the period before the following: (1,982) (6,034) (11,068) (14,276)
Intangible asset amortisation and impairment (1,217) (12,342) (16,490) (31,456)
Exceptional items (3,154) 26 (6,495) 692
Profit on disposal of internet operations 187 - 490 -
Loss for the period (6,166) (18,350) (33,563) (45,040)
Weighted average number of shares in the period:
Basic and diluted 205,313,052 201,550,957 203,041,315 200,196,253
Basic and diluted loss per share before (1.0p) (3.0p) (5.5p) (7.1p)
intangible asset amortisation and impairment and
exceptional items
Intangible asset amortisation and impairment (0.6p) (6.1p) (8.1p) (15.7p)
Exceptional items (1.5p) - (3.2p) 0.3p
Profit on disposal of internet operations 0.1p - 0.3p -
Basic and diluted loss per share (3.0p) (9.1p) (16.5p) (22.5p)
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 Share Profit
share Shares to premium Merger and loss
capital be issued account reserve account
£'000 £'000 £'000 £'000 £'000
At 1 April 2001 505 752 72,425 38,536 (57,856)
Prior year adjustment (note 1) - - - (29,063) 29,063
Loss for the year - - - - (33,563)
Exchange adjustments offset in reserves - - - - 74
Shares issued in respect of share options 2 - 4 - -
exercised
Contingent share consideration for acquisitions 8 (296) - 288 -
in prior years
Movement in fair value of contingent share - (203) - - -
consideration for acquisitions in prior years
Realisation of merger reserve - - - (6,788) 6,788
At 31 March 2002 515 253 72,429 2,973 (55,494)
Shares were issued for acquisitions during previous years. 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 Quarter Year Year
ended ended ended ended
31 Mar 31 Mar 31 Mar 31 Mar
2002 2001 2002 2001
£'000 £'000 £'000 £'000
Opening shareholders' funds 27,117 73,326 54,362 94,941
Loss for the period (6,166) (18,350) (33,563) (45,040)
Shares issued for acquisitions - - - 3,701
Net movement in contingent share consideration (316) (607) (203) 672
Employee share options exercised 6 33 6 46
Shares issued in part settlement of acquisition of - 75 - 75
intangible asset
Premium on shares issued to employees - - - 87
Exchange adjustments offset in reserves 35 (115) 74 (120)
Closing shareholders' funds 20,676 54,362 20,676 54,362
Net cash outflow from operating activities
Quarter Quarter Year Year
ended ended ended ended
31 Mar 31 Mar 31 Mar 31 Mar
2002 2001 2002 2001
£'000 £'000 £'000 £'000
Operating loss (6,515) (18,774) (34,742) (47,467)
Depreciation and impairment of tangible fixed 608 299 1,769 1,213
assets
Amortisation and impairment of intangible fixed 1,217 12,342 16,490 31,456
assets
Decrease/(increase) in stock 173 564 677 (356)
Decrease/(increase) in debtors 796 (457) 4,591 (5,483)
Increase in creditors/provisions 3,497 434 1,835 821
Loss on disposal of tangible fixed assets 104 76 177 76
Profit on disposal of intangible fixed assets - (312) - (312)
(120) (5,828) (9,203) (20,052)
8. Post balance sheet events
On 28 April 2002 the Company disposed of the trade and assets of the Hardware
Services business to three members of the Business Division management team.
Under the terms of three separate agreements, Rainbow Telecom Limited, Planet
Solutions Limited and Absolute Voice and Data acquired selected Hardware
Services assets and the right to sell telephone systems, maintenance and related
services to specific Group Customers. The cumulative consideration was an
amount not exceeding £500,000, which may reduce to nil depending on the
achievement of certain performance targets.
On 21 May 2002, following approval of shareholders at an EGM, the Company
changed its name to Eckoh Technologies plc.
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