Interim Results - Part 1
365 Corporation PLC
29 November 2000
PART 1
Second Quarter and Interim Results
For the quarter and six months ended 30 September 2000
Exceptional Growth Continues Throughout the Business
Half year revenue up 131% to £22.0m
Half year gross profits up 102% to £8.8m
Unique users have tripled over the 12 months to 2.4m
365 Corporation plc, the digital media and communications company, today
announces results for the six months and quarter ended 30 September 2000 (Q2)
showing continued strong growth throughout its operations.
Financial Highlights for Six Months to September 2000 (H1)
* Group revenue up 131% to £22.0m (H1 1999/00 £9.5m)
* Gross profit up 102% to £8.8m (H1 1999/00 £4.4m)
* Consumer revenue up 106% to £13.9m (H1 1999/00 £6.7m)
* Business revenue up 191% to £8.1m (H1 1999/00 £2.8m)
Financial Highlights Q2
* Group revenue of £12.0m - up 144% on Q2 1999/00 and up 20% on Q1 2000/01
(£10.0m)
* Gross profit of £4.8m - up 107% on Q2 1999/00 and up 21% on Q1 2000/01
(£4.0m)
* Consumer revenue of £7.5m - up 125% on Q2 1999/00 and up 17% on Q1 2000/01
(£6.4m)
* Business revenue of £4.5m up 184% on Q2 1999/00 and up 26% on Q1 2000/01
(£3.6m)
* Operating costs (including marketing) fell to 65% of revenue (Q1 2000/01
74%)
* Operating loss reduced to £3.0m (Q1 2000/01 £3.4m), reducing as a
percentage of revenue to 25% from 34%
* Cash and short term deposits £40.7m at 30 September (30 June 2000 £45.7m)
after cash used for acquisitions during the quarter totalling
£1.7m
Operational Highlights Q2
CONSUMER DIVISION
* Total monthly users increased to 2.4m in September 2000 up 14% on previous
quarter (June 2000 2.1m)Web Services
* 5 new sites launched: My365, Gay365, Formula1 in French, Rally365 and
Future365
* Rapid growth in non-advertising/sponsorship driven revenue streams through
in-house e-commerce initiatives, The Switch and partnership deals with
Amazon.co.uk and Online Travel Co.
* Advertising and sponsorship deals with Sportingbet, Express Newspapers and
MSN
* Content/commercial deals signed with ITV Rugby, Zurich Financial Services
and Sports Pages
Audio and Interactive Voice Services
* Partnership deal with service provider Greenland Interactive, 50% owned by
Associated News, to provide audiotext services and bureau facilities
* Consolidated standing as preferred audiotext service provider for Granada
through running competitions for Formula 1 races
* Partnership with service provider Voice Media, owned by Trinity Mirror
Group, to provide bureau services
TV/Broadband Services
* 365Television continues to expand with another 8-part series, The Camper
Van, which is in development for Channel 4's new entertainment channel, E4.
* Establishment of Broadband365 producing audio, video and interactive
products for broadband platforms including web sites and interactive TV
Mobile Phones
* Acquisition of Phones Express to support growth of mobile phone operations
in both divisions
BUSINESS DIVISION
* Business customers increased 14% to 3,945 (June 2000 3,473)
* Business365 web site launched
* Consolidation strategy proceeding with acquisition of Compass during the
quarter and subsequently Systematic, Essential and Ringback to extend voice
and data hardware capabilities and increase addressable customer base
* Continued strong growth of mobile services, now through direct contracts
with Vodafone and Cellnet
Dan Thompson, Chief Executive Officer, commenting on the results said:
'We have, once again, demonstrated our ability to generate high rates of
revenue and gross profit growth while tightly controlling our costs. Growth
has been exceptional. We have more than doubled revenues to £22m and gross
profits to £9m for the half year and all parts of the business are showing
strong growth. Operating costs have continued to fall as a percentage of
revenue, clearly demonstrating the company's move towards profitability.
I am delighted with the progress we have made this quarter building on last
quarter's fantastic start to the financial year. Quarterly revenues were up a
further 20% to £12 million and gross profit increased by 21% to nearly £5m.
This was achieved despite Q2 traditionally being a slow quarter for us as it
includes the holiday months of July and August, which impact all areas of our
business. Monthly users of our consumer services grew to 2.4 million - up
more than threefold from the previous year - and monthly business customers
have almost doubled since the previous year to 3,945.
We remain very excited by the outstanding opportunities that exist in the
digital media and communication sectors and we look forward to continuing our
aggressive growth strategy and drive towards profitability.'
For further enquiries, please contact
365 Corporation plc Tel: 020 7505 7800
Dan Thompson, Chief Executive Officer www.365corp.com
Martin Turner, Finance Director
Financial Dynamics Tel: 020 7831 3113
Giles Sanderson
Fiona Meiklejohn
Ben Atwell
Financial and Operating Data Summary
Financial data (£'000)
Half-yearly 6 months ended 6 months ended
30 Sep 1999 30 Sep 2000
Revenue
Consumer Division 6,743 13,903
Business Division 2,792 8,125
Total revenue 9,535 22,028
Cost of sales (5,163) (13,185)
Total gross profit 4,372 8,843
Operating costs (3,599) (10,937)
Operating profit/(loss) before 773 (2,094)
marketing costs
Marketing costs** (1,006) (4,310)
Operating loss* (233) (6,404)
Quarterly 3 months ended 3 months ended 3 months ended
30 Sep 1999 31 Dec 1999 31 Mar 2000
Revenue
Consumer Division 3,333 3,585 4,391
Business Division 1,593 1,981 2,928
Total revenue 4,926 5,566 7,319
Cost of sales (2,591) (3,047) (4,400)
Total gross profit 2,335 2,519 2,919
Operating costs* (2,351) (3,483) (3,678)
Operating loss before (16) (964) (759)
marketing costs
Marketing costs** (494) (1,851) (2,102)
Operating loss* (510) (2,815) (2,861)
Cash and short term 6,729 62,947 52,633
deposits
Quarterly 3 months ended 3 months ended
30 Jun 2000 30 Sep 2000
Revenue
Consumer Division 6,406 7,497
Business Division 3,596 4,529
Total revenue 10,002 12,026
Cost of sales (5,999) (7,186)
Total gross profit 4,003 4,840
Operating costs* (5,360) (5,577)
Operating loss before marketing costs (1,357) (737)
Marketing costs** (2,031) (2,279)
Operating loss* (3,388) (3,016)
Cash and short term deposits 45,703 40,663
* 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.
Operating data
Sep 1999 Dec 1999 Mar 2000 Jun 2000 Sep 2000
Consumer 779,000 1,031,000 1,752,000 2,091,000 2,391,000
Division -
unique
users(1)
Business 2,170 2,484 2,989 3,473 3,945
Division -
customers(2)
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.
Chief Executive Officer's Review
365 generated group revenue of £22.0m (up 131% from last year) and gross
profit of £8.8m (up 102%) during the six months ended 30 September 2000 and
tripled our unique users to 2.4 million over the past year. The second
quarter continued the excellent start to the financial year with turnover
totalling £12.0m and gross profit £4.8m. Losses in the first half of the year
increased to £6.4m (£0.2m in the same period last year) as 365 has invested
in its successful growth strategy.
These highly positive results were achieved despite the slow summer months
and were delivered through a combination of organic growth and acquisitions.
Operating costs fell as a percentage of revenue from 74% to 65% for the
quarter. Our operating loss reduced for the quarter, demonstrating the move
towards profitability.
CONSUMER DIVISION
Consumer Division revenue for the first half of the financial year was
£13.9m, more than double the same period last year (£6.7m). Second quarter
revenue increased to £7.5m from £6.4m in the previous quarter. This
impressive growth in revenue across all our platforms reflects the increasing
value of our content offering. In particular our internet channel continues
to grow rapidly with revenues up a further 44% to £1.6m from £1.1m last
quarter. In audiotext, (audio and interactive voice services), we grew
revenues by 9% on the previous quarter (Q1 to Q2 last year, revenues fell 7%).
Web services
Commercial Operations
Revenue grew strongly in the quarter with all three main revenue streams -
advertising/sponsorship; e-commerce; content sales - putting in strong
performances. Advertising/sponsorship continues to constitute the majority of
the revenue with the betting and gaming contribution being particularly
encouraging.
E-commerce revenues grew rapidly during the quarter and are now starting to
make a significant contribution to overall web revenues. 365 has two strands
to its e-commerce strategy: first party e-commerce, where 365 takes inventory
risk, is to focus on high margin operations where the internet adds value and
which take advantage of 365's expertise and audiences. We are starting to see
the benefit of this in sports (our rugby shop) and companionship (the
Switch). Secondly, we look to complement this strategy by creating commercial
partnerships in selected areas with best-of-breed third parties, where 365
earns a commission on goods or services sold. In this quarter we completed
arrangements with, amongst others, Amazon.co.uk and the Online Travel Co.
Content sales, driven by our ability to offer a complete web through to
mobile solution, have also performed well as highlighted by our contracts
with ITV, Zurich Premiership and Lagardere.
Web sites
We also successfully launched five new web sites in the quarter. My365,
Gay365, Formula1 in French, Rally365 and Future365. We also renewed our
contracts with both ITV and Zurich Financial Services to run and maintain
their online rugby web sites, itv-rugby.co.uk and rugbyclub.co.uk.
My365 (www.my365.com) is designed to offer users of the 365 network a central
point for all their content, communication and commerce requirements.
Gay365 (www.gay365.com) offers services on events and general information for
the gay community.
Rally365 (www.rally365.com) was added to the Sports Division portfolio,
covering all aspects of the sport - from a 12-car rally in the north of
Scotland to the fourteen rounds of the World Championship.
Future365 (www.future365.com), a wide-ranging site with coverage including
astrology services provided through a multi-media partnership with Russell
Grant.
These launches increase 365's network to 36 web sites covering lifestyle,
sports and entertainment.
Audio & Interactive Voice Services
365 has continued to build on its strategy of becoming the country's leading
provider of audio and interactive voice services. During the quarter we
increased the capacity for terminating calls and are now the UK's largest
service provider. Other highlights of the quarter included the consolidation
of our standing as the preferred audiotext service provider for Granada. We
ran a series of competitions for them in relation to the last Formula 1 races
of the season, which were highly successful.
We have also agreed a number of partnership deals with service providers. We
now have an agreement with Greenland Interactive, 50% owned by Associated
News, to provide audiotext services and bureau facilities. We also commenced
a partnership with Voice Media, the service provider owned by Trinity Mirror
to provide business services including terminating thousands of calls for
'This Morning'. This builds on our existing relationship with Trinity Mirror
where we provide companionship services to their regional newspapers.
Television & Broadband Services
365Television continues to make high quality digital TV for outside
distribution partners such as BBC Choice, Channel 4 and BBC Worldwide.
Following the success of Mike Tyson in the UK and the 8-part Mark Owen's
Celebrity Scooters series for BBC Choice, 365Television has been chosen to
develop two more series with digital television channels. One, an 8-part
constructed reality show called The Camper Van, is set to be a flagship show
for Channel 4's new entertainment channel, E4. The other, a 6-part series,
should be announced shortly. Currently in production are The Real Mike Tyson,
a 60 minute documentary for international distribution, an original animated
comedy series, The Disco Vicars, and three short sports-based films for BBC
Worldwide.
Our newly formed Broadband365 department continues to expand our audio, video
and interactive products for broadband digital platforms. During the quarter
the unit produced 50 short video films for 365 web sites, which resulted in
more than 100,000 downloads. Currently in development is an interactive TV
football results service and New York Soccer Stories, a series of short films
based around the Inner City World Cup in New York.
Mobile Services
Mobile phones continue to play a key part in the growth of our Consumer
Division revenues from audiotext services and we are very excited about the
revenue and distribution potential for all of 365's content via these
devices. WAP technology provided an initial channel of access to our web
content via mobile phones; we expect SMS messaging, which is ideally suited
to some of our sports and lifestyle services, to become a valuable source of
incremental revenue
The growing importance of the mobile phone to both our Consumer and Business
Division led us to acquire in September the entire issued share capital of
Phones Express for up to £2.9 million payable in cash and shares. Phones
Express' mobile telephony expertise, particularly in the areas of marketing,
customer service and procurement, will greatly enhance our mobile operations
in both Divisions. Phones Express also allows us to further leverage our
substantial user base as we make its mobile product offerings available to
365's users.
BUSINESS DIVISION
365 continues to implement its strategy to become the leading UK provider of
multiple telecommunications services to the SME market under the 'Symphony'
brand. Business Division revenue increased to £4.5m during the quarter, a 25%
increase compared to the previous quarter's £3.6m - an excellent performance
during the usually slow summer period. Revenue for the first half of the
financial year was £8.1m, up 189% on the same period last year (£2.8m).
Growth has been strong across all areas - voice and data hardware, fixed line
and mobiles - as we continue to expand our product portfolio to meet the
increased demand for data-related services, and cross-sell multiple products
into our growing (organically and via acquisition) customer base.
Acquisition Strategy
We are actively acquiring complementary businesses to build critical mass and
accelerate the expansion plans of the Business Division. On 29 August 2000
365 completed the acquisition of the whole of the issued share capital of
Compass Communications Technical Services Limited, and the balance of the
issued share capital of Compass Telecom Limited, a joint venture company of
which 365 previously owned 45%. The maximum consideration payable is a
mixture of cash and 365 shares totalling £1.75m, and includes £0.45m subject
to the achievement of post-acquisition performance targets. This acquisition
along with further acquisitions made since the end of the quarter have
significantly strengthened our hardware capabilities, particularly in respect
of larger and higher specification telephone systems and related data
services, and extended our direct distribution in the South East of England.
They have also provided a significantly increased customer base for our
'one-stop-shop' strategy, whereby we leverage existing sales relationships,
to on-sell value added voice and data communication services.
DEVELOPMENTS SINCE QUARTER END
CONSUMER DIVISION
Internet radio
We have further developed our proprietary services by the launch of our own
internet radio station on the Football365 web site. A mixture of news,
opinion and interviews is broadcast daily, and with the onset of high-speed
broadband connections, the service will be extended in the months ahead. We
have introduced internet radio to our Music365 site through a deal with Storm
Live and have augmented our audio capacity with streamed music features.
SMS
A cross platform product has been launched within the companionship sector,
incorporating phone and short messaging services (SMS), enabling automatic
notification to their mobile phone of voice messages received. This advanced
use of interactive voice response (IVR) technology adds a new dimension to
core audio products and opens itself to a wider market.
Betting and Gaming
On 10 October, 365 announced an exclusive Football365 fixed-odds deal with
Sportingbet.com. 365 and Sportingbet will create a co-branded betting area,
which will feature unique content and be customised to actively encourage
sign-up to Sportingbet services. The deal covers all future national and
international sites to be developed by Football365, across all languages,
with 365 receiving a fixed sponsorship payment in addition to a performance
related fee for all the new accounts signed up for by 365 users.
We have also recently appointed Sporting Index as our exclusive provider of
spread betting services, both in the sports and financial areas. The deal
provides guaranteed revenues for 365 in exchange for promotion of Sporting
Index's spread betting services across the 365 network and also allows for
promotion of 365 products to Sporting Index's existing client base. 365 and
Sporting Index will create jointly branded betting markets using 365's unique
statistical services in conjunction with Sporting Index's ability to create
and run a market.
The new partnerships with Sportingbet.com and Sporting Index are significant
steps in 365's strategy of working with the leading player in the various
categories of betting and gaming activities. These latest agreements build on
the company's previous successes during Euro 2000 and the development of
exclusive fantasy games in conjunction with Fantasy League.
BUSINESS DIVISION
Business 365
On 7 October, 365 officially launched Business365 (www.business365.co.uk), an
independent business portal designed to offer online business content, with
relevant news, features, interviews and advice, specifically designed to
appeal to SMEs.
Business365 has also formed a preferred supplier partnership with the UK200
Group, the UK's largest mutual association of Chartered Accountants with 175
member firms, representing 135,000 SMEs. This alliance will give these
businesses priority access to telecommunications solutions and day-to-day
online requirements through the web site.
Essential
On 5 October 2000, 365 completed the acquisition of the net assets of
Essential Voice and Data (a partnership operated by its founders, John
Donnohoe and Clifford Smith) and the balance of the issued shares of
Essential Network Solutions Limited, a joint venture company in which 365
previously owned 50%. The companies provide a wide range of fixed-line, voice
and data services to businesses and consumers in the UK. The maximum
consideration payable is a mixture of cash and 365 shares totalling £2.4m,
and includes £0.45m subject to the achievement of post-acquisition
performance targets.
Systematic
On 5 October 2000, 365 acquired the whole of the issued share capital of
Systematic Telecoms Limited (Systematic) for a consideration of up to £2.72m
payable in cash and shares. Based in Uckfield, Sussex, Systematic will add
considerable strength to 365's voice and data hardware capabilities and
provide a large and established customer base to which 365 can sell
additional products and services. The acquisition will further extend the
large geographic coverage of 365's UK operations.
Ringback
On 8 November 2000, 365 acquired the assets of Ringback Communications
Limited (Ringback) and RBC Services (RBCS) Limited for a cash consideration
of £0.57m. The acquisition has been made to further develop 365's Business
Division business customer base. Ringback and RBCS, are involved in telephone
system sales, installation, and the provision of support and maintenance
services principally to small and medium sized businesses. Both companies
have been trading for 11 years.
CURRENT TRADING AND OUTLOOK
We continue to set ourselves aggressive revenue and gross profit targets and
are delighted with the results to date. The Directors are very excited and
confident about the Company's future prospects.
We are particularly excited about the development of our comprehensive voice
portal. This entirely voice driven interface will provide users with access
to a full range of communication, content and community services via one
telephone number. The Directors believe our voice portal will provide
significant revenue and profit generation opportunities for 365. We expect to
announce further details of this new project in the coming weeks.
Financial Review
Consumer Division
Users. During the quarter to 30 September 2000, Consumer Division users grew
strongly to 2.38m, a 13.9% increase from June 2000 (2.09m users) and a
threefold increase compared to September 1999 (0.78m users).
Revenue. Consumer Division revenue for the quarter ended 30 September 2000
was £7.50m, which includes £0.33m of revenue from the acquisition of Phones
Express which completed on 8 September 2000. This compares to £3.33m for the
quarter to 30 September 1999 and £6.41m for the previous quarter. Internet
revenue in particular grew strongly to £1.56m, up 44.4% compared to the
previous quarter ended 30 June 2000 (£1.08m) and up 437.9% compared to the
same period last year (£0.29m).
Cost of Sales. Cost of sales relates primarily to the direct costs of
advertising 365's audiotext services in a variety of media totalling £1.67m
and freephone (0800) access charges, commissions and royalties payable to
third parties of £2.46m for the quarter. Consumer Division gross profit was
£3.36m for this quarter, representing 44.8% of revenue. This compares to
£2.82m for the previous quarter.
Administrative Expenses. 365 continues to invest in expanding its consumer
operations, which is reflected in administrative expenses (excluding
amortisation of goodwill and provision for NIC and similar taxes on share
options) of £4.80m for the second quarter, which includes £0.10m in relation
to Phones Express. This compares to £4.12m for the previous quarter. Also
included in administrative expenses are content and brand marketing costs of
£1.19m (£1.03m for the previous quarter).
Operating Loss. Operating losses (before amortisation of goodwill and
provision for NIC and similar taxes on share options) were £1.43m for this
quarter, compared to £1.30m for the previous quarter. This reflected the
increase in revenue during this quarter offset by the continued investment in
new products and services and increased marketing spend as part of our growth
strategy.
Business Division
Customers. 365 increased its number of business customers to 3,945 as at 30
September 2000, an increase of 13.6% from 30 June 2000 (3,473) and 81.8% from
the prior year (2,170).
Revenue. Revenue during the quarter increased to £4.53m, 25.8% up on the
previous quarter (£3.60m) and 184.9% on the same period last year (£1.59m).
This growth reflects the growth in the number of customers and increasing
average monthly revenue per customer as 365 continues to expand its product
portfolio, as well as the impact of the acquisition of Compass Communications
which completed on 29 August 2000.
Cost of Sales. Cost of sales of £3.05m for the quarter includes costs
relating to the provision of telephone system equipment, network access
charges, mobile handsets and airtime charges and internet service costs.
Gross profit as a percentage of revenue during the quarter was 32.7% compared
to 32.8% for the previous quarter.
Administrative Expenses. Administrative expenses totalling £2.21m (excluding
amortisation of goodwill and provision for NIC and similar taxes on share
options) include costs related to the development and management of 365's
infrastructure, customer services, sales and marketing expenses, general
operating expenses and personnel. Sales and marketing costs for the quarter
were £1.09m (£1.00m for the previous quarter).
Operating Loss. Operating losses (before amortisation of goodwill and
provision for NIC and similar taxes on share options) for the quarter ended
30 September 2000 were £0.74m compared to £1.05m for the previous quarter.
Corporate
Administration. During the quarter ended 30 September 2000, 365's corporate
administrative costs decreased to £0.85m, compared to £1.04m for the previous
quarter. These costs include ongoing expenditure in relation to the Board of
Directors and other corporate employees, compliance costs in respect of 365's
status as a listed company and corporate marketing.
Amortisation of Goodwill. In accordance with the provisions of FRS 10
'Goodwill and Intangible Assets', 365 recorded a goodwill amortisation charge
of £6.31m during the quarter.
Provision for NIC and similar taxes on share options. On exercise of share
options (which are exercisable over a period of up to seven years from the
date of the grant) issued after 6 April 1999, the Company will be required to
pay NIC and overseas equivalents on the difference between the exercise price
and market value of the shares issued. Following the issue of UITF25 the
Company is now required to spread the liability over the period to vesting.
In the previous year the Company made a full provision following the grant of
options and as a result has made a prior year adjustment of £1.99m to reflect
the change in accounting policy. Prior period comparatives have been restated
to reflect the new policy. The provision reduced by £0.05m for the quarter
and £0.59m for the six months ended 30 September 2000.
Net Interest Income. Investment income for the quarter was £0.70m arising
from the investment of 365's cash balance in a variety of interest-bearing
deposit accounts.
Taxation. 365 has incurred a cumulative net loss since inception and the
Company expects to incur additional net losses for the foreseeable future.
Retained Loss. The Company recorded a group net loss of £8.58m during the
quarter and £16.48m for the half year.
Liquidity and Capital Resources
During the quarter ended 30 September 2000, the Company's operating
activities used cash totalling £3.51m, compared to £4.08m for the previous
quarter. The cash outflow from capital expenditure during the quarter
totalled £0.27m, relating primarily to the purchase of computer equipment as
365 expanded its operations. The corresponding figure for the previous
quarter was £0.65m. The acquisitions of Compass Communications and the
balance of shares in Compass Telecom on 8 September 2000 and the purchase of
Phones Express on 29 August 2000 resulted in net cash outflows during the
quarter of £1.75m.
As at 30 September, 365's cash balance was £40.66m, compared to £45.70m as at
30 June 2000.
Consolidated profit and loss account
for the quarter and 6 months ended 30 September 2000
Quarter ended Quarter ended
30 September 30 September 1999
2000 unaudited & restated
unaudited £'000
Note £'000
Turnover
Continuing operations 11,593 4,926
Acquisitions 433 -
3;4 12,026 4,926
Cost of sales (7,186) (2,591)
Gross profit 4,840 2,335
Administrative expenses 7,856 2,845
before the following:
Amortisation of goodwill 6,312 622
Provision for NIC and (49) 70
similar taxes on share
options
Total administrative 14,119 3,537
expenses
Operating loss before 3;4 (3,016) (510)
goodwill amortisation and
provision for NIC and
similar taxes on share
options
Continuing operations (9,236) (1,202)
Acquisitions (43) -
Operating loss (9,279) (1,202)
Net interest receivable 699 69
Loss on ordinary (8,580) (1,133)
activities before taxation
Taxation (3) -
Loss on ordinary (8,583) (1,133)
activities after taxation
Minority interests 6 36
Retained loss for the (8,577) (1,097)
period
Loss per ordinary share 5
Basic and diluted loss per (1.2p) (0.3p)
share before amortisation
of goodwill and provision
for NIC and similar taxes
on share options
Basic and diluted loss per (4.3p) (0.8p)
share
6 months ended 6 months ended
30 September 2000 30 September 1999
unaudited unaudited &
£'000 restated
Note £'000
Turnover
Continuing operations 19,305 9,535
Acquisitions 2,723 -
3;4 22,028 9,535
Cost of sales (13,185) (5,163)
Gross profit 8,843 4,372
Administrative expenses 15,247 4,605
before the following:
Amortisation of goodwill 12,144 1,129
Provision for NIC and (590) 70
similar taxes on share
options
Total administrative 26,801 5,804
expenses
Operating loss before 3;4 (6,404) (233)
goodwill amortisation
and provision for NIC
and similar taxes on
share options
Continuing operations (18,195) (1,432)
Acquisitions 237 -
Operating loss (17,958) (1,432)
Net interest receivable 1,441 132
Loss on ordinary (16,517) (1,300)
activities before
taxation
Taxation (26) -
Loss on ordinary (16,543) (1,300)
activities after
taxation
Minority interests 57 59
Retained loss for the (16,486) (1,241)
period
Loss per ordinary share 5
Basic and diluted loss (2.5p) (0.0p)
per share before
amortisation of goodwill
and provision for NIC
and similar taxes on
share options
Basic and diluted loss (8.3p) (0.9p)
per share
Statement of total recognised gains and losses
for the quarter and 6 months ended 30 September 2000
Quarter Quarter 6 months 6 months
ended ended ended ended
30 September 30 30 30
2000 September September September
unaudited 1999 2000 1999
£'000 unaudited & unaudited unaudited
restated £'000 & restated
£'000 £'000
Retained loss (8,577) (1,097) (16,486) (1,241)
for the period
Exchange 69 8 22 4
adjustments
Total (8,508) (1,089) (16,464) (1,237)
recognised
losses for
the period
Prior year 10 - (185) 1,992 (185)
adjustment
Total (8,508) (1,274) (14,472) (1,422)
recognised
losses since
last period
Consolidated balance sheet
as at 30 September 2000
30 September 30 September 31 March
2000 1999 2000
unaudited unaudited unaudited &
restated
Note £'000 £'000 £'000
Fixed assets
Intangible fixed 39,058 9,611 40,660
assets
Tangible fixed 2,263 957 1,675
assets
41,321 10,568 42,335
Current assets
Stock - finished 1,056 33 587
goods
Debtors 11,281 3,421 8,284
Investments - 36,435 - 49,500
short term deposits
Cash at bank and 4,279 6,729 3,340
in hand
53,051 10,183 61,711
Creditors: amounts (9,667) (3,955) (8,309)
falling due within
one year
Net current assets 43,384 6,228 53,402
Total assets less 84,705 16,796 95,737
current
liabilities
Creditors: amounts (1,706) (15) (245)
falling due after
more than one year
Provisions for 10 (124) (70) (704)
liabilities and
charges
Net assets 82,875 16,711 94,788
Capital and 6
reserves
Called up share 500 355 493
capital
Shares to be issued 1,822 - 80
Share premium 72,320 14,091 72,220
account
Merger reserve 37,528 5,770 34,844
Profit and loss (29,160) (3,381) (12,696)
account
Total equity 7 83,010 16,835 94,941
shareholders'
funds
Minority interests (135) (124) (153)
Capital employed 82,875 16,711 94,788
Consolidated cash flow statement
for the quarter and six months ended 30 September 2000
Quarter Quarter
ended ended
30 September 2000 30 September 1999
unaudited unaudited
£'000 £'000
Note
Net cash outflow from 8 (3,505) (272)
operating activities
Return on investments and
servicing of finance
Net interest 616 69
Taxation (74) -
Capital expenditure and
financial investment
Purchase of tangible (266) (339)
fixed assets
Acquisitions
Net cash acquired with 9 12
subsidiary undertakings
Purchase of subsidiaries 9 (1,749) (17)
(1,740) (5)
Cash outflow before use (4,969) (547)
of liquid resources and
financing
Management of liquid
resources
Decrease in short-term 6,825 -
deposits
Financing
Issue of shares 1 566
Capital element of (21) -
finance lease payments
(20) 566
Increase in cash in the 1,836 19
period
Consolidated cash flow statement
for the quarter and six months ended 30 September 2000
6 months 6 months
ended ended
30 September 2000 30 September 1999
unaudited unaudited
£'000 £'000
Note
Net cash outflow from 8 (7,582) (912)
operating activities
Return on investments and
servicing of finance
Net interest 1,394 132
Taxation (72) -
Capital expenditure and
financial investment
Purchase of tangible (916) (405)
fixed assets
Acquisitions
Net cash acquired with 420 12
subsidiary undertakings
Purchase of subsidiaries 9 (5,121) (17)
(4,701) (5)
Cash outflow before use (11,877) (1,190)
of liquid resources and
financing
Management of liquid
resources
Decrease in short-term 13,065 -
deposits
Financing
Issue of shares 14 2,603
Capital element of (56) -
finance lease payments
(42) 2,603
Increase in cash in the 1,146 1,413
period
Notes to the quarterly financial statements
1. Basis of preparation
The financial statements for the quarter and six months ended 30 September
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 9). 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 six months ended 30 September 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 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 six months ended 30 September 2000 were
approved by the Board on 28 November 2000 and will posted on the Company's
web site, www.365corp.com, on 29 November 2000 and advertised in the
Financial Times on Saturday 2 December 2000.
2. Operating data September 1999 to September 2000
Sep Dec Mar Jun Sep
Consumer
Division
Unique
users(1)
Sport
Football 376,000 478,000 607,000 641,000 722,000
Euro2000 - - - - 154,000 10,000
German,
Italian,
Spanish
sites
Cricket 148,000 156,000 224,000 252,000 269,000
Rugby 38,000 26,000 187,000 176,000 189,000
Other 3,000 - 196,000 261,000 455,000
Total Sport 565,000 660,000 1,214,000 1,484,000 1,645,000
Entertainment 118,000 225,000 366,000 318,000 436,000
Lifestyle 96,000 146,000 172,000 289,000 310,000
Total unique 779,000 1,031,000 1,752,000 2,091,000 2,391,000
users
User
sessions(2)
Sport
Football 3,276,000 3,734,000 3,979,000 4,650,000 4,823,000
Cricket 4,599,000 4,698,000 5,348,000 5,267,000 5,180,000
Rugby 70,000 108,000 897,000 1,009,000 1,055,000
Other 3,000 - 427,000 490,000 771,000
Total Sport 7,948,000 8,540,000 10,651,000 11,416,000 11,829,000
Entertainment 248,000 559,000 760,000 721,000 917,000
Lifestyle 572,000 792,000 921,000 1,243,000 1,219,000
Total user 8,768,000 9,891,000 12,332,000 13,380,000 13,965,000
sessions
Audiotext 6,073,000 6,063,000 5,784,000 7,792,000 6,968,000
minutes(3)
Business
Division
Business 2,170 2,484 2,989 3,473 3,945
customers(4)
Business 10,047,000 9,244,000 14,448,000 16,409,000 17,488,000
minutes(5)
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