Interim Results
Telme.Com PLC
15 December 2000
TelMe.com plc
Interim Results for the Six Months Ended 30 September
2000
Highlights
* Turnover in Customer Relationship Management division
increased by 26% compared to equivalent period last
year because of important new business wins including
Thomas Cook. The Group's CRM division currently
accounts for around 62 per cent. of turnover and now
represents core of Group's activities.
* Corporate Travel division which was loss making last
year performed strongly with turnover up by 31%
compared to same period last year and is now generating
much improved results. Operating profits before
goodwill amortisation were £0.3 m.
* Turnover in Online Services division increased by 77%
compared to same period last year as a result of growth
of TelMe Global Traveller and increase in sales of
Ticket Window Travel software products.
* Group turnover rose by 32% overall to £8.4m (1999:£6.4m).
* Gross profit increased by 38% to £6.6m (1999:£4.8m).
* Pre-tax loss before goodwill for the half year was
£0.7m (1999: £1.1m) a further significant improvement
on the previous period despite non-recurring marketing
launch costs of £0.4m.
* Group will continue to seek acquisitions which are
complimentary to its existing business and will enable
it to accelerate its growth in core markets.
Commenting on the results, Sir Gordon Brunton, Chairman
said:
'The development of the Group's businesses achieved in
the first half is continuing in the second half and the
Directors are encouraged by the progress in the year to
date. The markets in which our businesses operate are
growing and the increased scale of our operations is
enabling us to take advantage of economies of scale to
further improve our efficiency. The Board remains
confident in the future and I would like to thank our
shareholders for their continuing support.'
For further information, please contact:
TelMe.com plc
Graham Ramsey, Chief Executive 020 7240 2640
Richard Law, Finance Director 020 7240 2640
Golin/Harris Ludgate
Richard Hews 020 7253 2252
Chairman's Statement - Six Months to 30 September 2000
Overview
The Group made good progress in the first half of the
year and this progress has continued in the second half.
At the half year, Group turnover was up by 32 per cent.
compared to the same period in the previous year and
gross profit was up by 38 per cent. as a result of
positive growth in all of our three divisions.
Divisional Review
Customer Relationship Management (CRM) Division (formerly
CIDM Division)
In the first half of the year, turnover in this division
increased by 26 per cent. compared to the equivalent
period in the previous year because of important new
business wins with customers such as Thomas Cook.
As a result, the division generated operating profits
before goodwill amortisation of £0.6 million compared to
a loss of £0.1 million in the same period last year. In
the last full year, the CRM division generated profits
before goodwill of £1.1 million despite the first half
loss of £0.1 million and the Directors believe that the
future prospects for this business are excellent. The
Group's CRM division currently accounts for around 62 per
cent. of Group turnover and now represents the core of
the Group's activities. Operating profits after goodwill
for the first half of the year were £0.3 million compared
to a loss of £0.3 million for the same period last year.
The earnout arrangements for GB Mailing Systems Limited
('GB'), which was acquired in 1998 and which represents
the bulk of the CRM division's turnover, came to an end
in July 2000. As a result of the significant growth in
profits since acquisition, an earnout payment of £4.0
million was made to the vendors of GB bringing total
consideration to £9.0 million. The majority of the
earnout payment of £4.0 million had been accrued in the
accounts at the time of the acquisition and the earnout
payment was satisfied by the issue of new ordinary shares
at an average price of 53p determined in accordance with
the terms of the acquisition agreement.
Corporate Travel Division
The Corporate Travel division has performed strongly and
is now generating much improved results. Considerable
work has been performed over the last two years to
improve and replace systems and reorganise management,
which is now proving successful. Turnover in the first
half of the year was 31 per cent. higher than in the
previous year and operating profits before and after
goodwill amortisation were £0.3 million (1999: £0.1
million loss) and £0.2 million (1999: £0.2 million loss)
respectively.
Online Services Division
Turnover in the Group's Online Services division
increased by 77 per cent. compared to the same period in
the previous year as a result of the growth of the
Internet Travel Service 'TelMe Global Traveller'' and the
increase in sales of the Ticket Window travel suite of
software products.
Operating expenses increased as a result of the increased
size of the business and as a result of non-recurring
marketing costs of £0.4 million associated with the
launch of TelMe Global Traveller in the first quarter.
Losses in this division in the first half were £1.2
million (1999: £0.5 million). Costs are now lower than
in the first half and are expected to reduce further over
the course of the year.
It is the intention in the near future to merge the
Group's Online Services division with the Corporate
Travel division to bring all of the Group's travel
interests under one organisational structure. The
combined travel interests will then comprise a technology
driven Corporate Travel Agent with clients, such as ARM,
Novell, Halliburton and Schlumberger, a growing internet
travel service and software sales to the travel industry
in the UK and Internationally. The Directors believe that
the prospects for this business are good and the Group
will continue to examine ways to best develop shareholder
value from these interests.
Acquisitions
It is the Group's strategy to continue to grow both
organically and by acquisition. The Group will continue
to seek acquisitions which are complementary to its
existing business and which enable the Group to
accelerate its growth in its core markets.
Prospects
The development of the Group's businesses achieved in the
first half is continuing in the second half and the
Directors are encouraged by the progress in the year to
date. The markets in which our businesses operate are
growing and the increased scale of our operations is
enabling us to take advantage of economies of scale to
further improve our efficiency. The Board remains
confident in the future and I would like to thank our
shareholders for their continuing support.
Sir Gordon Brunton
Chairman
15 December 2000
CONSOLIDATED PROFIT AND LOSS ACCOUNT
_______________________________________________________________
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2000
Unaudited Unaudited Audited
6 Months to 6 Months to Year to
30 September 30 September 31 March
2000 1999 2000
Note £'000 £'000 £'000
Gross sales 3
Customer Relationship Management 5,207 4,124 9,181
Online Services 3,484 607 2,498
Corporate Travel 25,534 19,023 39,917
_______ _______ _______
34,225 23,754 51,596
_______ _______ _______
Turnover 3
Customer Relationship Management 5,207 4,124 9,181
Online Services 1,076 607 1,306
Corporate Travel 2,142 1,629 3,487
_______ _______ _______
8,425 6,360 13,974
Cost of sales (1,840) (1,606) (2,965)
_______ _______ _______
Gross profit 6,585 4,754 11,009
Other operating expenses (7,309) (5,892) (12,540)
(excluding goodwill
amortisation)
Goodwill amortisation 4 (319) (284) (613)
_______ _______ _______
Operating (loss) / profit
Customer Relationship Management 343 (303) 745
Online Services (1,234) (524) (1,818)
Corporate Travel 159 (202) (246)
Central costs (311) (393) (825)
_______ _______ _______
5 (1,043) (1,422) (2,144)
Interest receivable less payable 18 10 39
_______ _______ _______
Loss on ordinary activities
before taxation (1,025) (1,412) (2,105)
Taxation - - -
_______ _______ _______
Loss on ordinary activities
after taxation (1,025) (1,412) (2,105)
Dividend - - -
_______ _______ _______
Amount transferred from reserves (1,025) (1,412) (2,105)
======= ======= =======
Loss per 2.5p ordinary share 6
(pence) (1.4) (2.0) (3.0)
_______ _______ _______
Loss per 2.5p ordinary share 6
(pence) - diluted (1.4) (2.0) (3.0)
_______ _______ _______
Adjusted loss per 2.5p ordinary 6
share (pence) - before goodwill
amortisation (1.0) (1.6) (2.1)
======= ======= =======
CONSOLIDATED BALANCE SHEET
________________________________________________________________
AS AT 30 SEPTEMBER 2000
Unaudited Unaudited Audited
Note 30 September 30 September 31 March
2000 1999 2000
£'000 £'000 £'000
Fixed assets
Intangible assets 12,017 11,824 11,838
Tangible assets 2,150 2,178 2,178
_______ _______ _______
14,167 14,002 14,016
_______ _______ _______
Current assets
Stocks 1 11 1
Debtors 7,855 6,636 6,752
Cash and short term
deposits 2,983 3,201 4,036
_______ _______ _______
10,839 9,848 10,789
Creditors : amounts
falling due within one year (8,465) (7,436) (7,745)
_______ _______ _______
Net current assets 2,374 2,412 3,044
_______ _______ _______
Total assets less current
liabilities 16,541 16,414 17,060
Creditors : amounts due
in more than one year (393) (484) (443)
_______ _______ _______
16,148 15,930 16,617
======= ======= =======
Capital and reserves
Called up share capital 1,959 1,718 1,805
Share premium account 34,443 30,294 31,219
Merger reserve 7,757 7,389 7,757
Shares not yet issued 7 578 3,400 3,400
Profit and loss account (28,589) (26,871) (27,564)
_______ _______ _______
16,148 15,930 16,617
======= ======= =======
CONSOLIDATED CASHFLOW
________________________________________________________________
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2000
Note Unaudited Unaudited Audited
6 Months to 6 Months to Year to
30 September 30 September 31 March
2000 1999 2000
£'000 £'000 £'000
Net cash outflow from
operating activities 5(a) (1,002) (884) (653)
________ _______ _______
Returns on investments and
servicing of finance
Interest received 93 102 199
Interest paid (72) (88) (154)
Interest element of finance
lease rental payments (3) (4) (6)
_______ _______ _______
18 10 39
_______ _______ _______
Taxation
Corporation tax paid (8) - (92)
_______ _______ _______
Capital expenditure and
financial investment
Payments to acquire tangible
fixed assets (243) (198) (470)
Receipts from the sale of
tangible fixed assets 3 25 54
_______ _______ _______
(240) (173) (416)
_______ _______ _______
Acquisitions and disposals
Acquisition of subsidiary
undertakings (22) - (42)
Net overdrafts acquired with - - 29
subsidiary undertakings ________ _______ _______
(22) - (13)
_______ _______ _______
Cash outflow before use of
liquid resources and
financing (1,254) (1,047) (1,135)
_______ _______ _______
Management of liquid resources
Cash withdrawn from short
term deposits 18 1,302 1,997
_______ _______ _______
Financing
Proceeds from issue of
ordinary shares - - 990
Share issue costs - - (10)
Repayment of capital element
of finance leases and loans (69) (92) (144)
_______ _______ _______
(69) (92) 836
_______ _______ _______
Increase/(decrease) in cash 5(b) (1,305) 163 1,698
======= ======= =======
NOTES TO THE INTERIM FINANCIAL STATEMENTS
_________________________________________________________
1.BASIS OF PREPARATION
The interim financial statements are prepared on the
basis of the accounting policies set out in the annual
report and accounts for the year ended 31 March 2000.
2.PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information contained in this interim
statement is unaudited and does not constitute statutory
accounts as defined in section 240 of the Companies Act
1985. The financial information for the full preceding
year is based on the statutory accounts for the financial
year ended 31 March 2000. Those accounts, upon which the
auditors issued an unqualified opinion, have been
delivered to the Registrar of Companies.
3.GROSS SALES
Gross sales represents the value of goods and services
invoiced to customers exclusive of value added tax. This
additional disclosure is included to illustrate the
impact on the value of amounts invoiced to customers of
bought in services from airlines and other operators
which are charged on to customers by the Corporate Travel
and Online Services divisions. Turnover for the
Corporate Travel and Online Services divisions represents
commission income net of the cost of bought in services
invoiced out to customers.
4. GOODWILL AMORTISATION
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2000 1999 2000
£'000 £'000 £'000
Customer Relationship
Management (208) (195) (409)
Online Services (21) - (17)
Corporate Travel (90) (89) (187)
_______ _______ _______
(319) (284) (613)
_______ _______ _______
5. OPERATING LOSS
a) Reconciliation of operating loss to operating cash flows
Unaudited Unaudited Audited
6 months to 6 months to Year to
30 September 30 September 31 March
2000 1999 2000
£'000 £'000 £'000
Operating loss (1,043) (1,422) (2,144)
Depreciation 271 269 542
Amortisation of
intangible fixed assets 80 80 160
Goodwill amortisation 319 284 613
(Profit) / loss on
disposal of fixed assets (3) (1) 6
Increase in debtors (1,106) (640) (726)
Decrease in stocks - - 10
Increase in creditors 480 546 886
_______ _______ _______
(1,002) (884) (653)
======= ======= =======
b) Reconciliation of net cashflow to
movement in net funds
Unaudited Unaudited Audited
6 Months to 6 Months to Year to
30 September 30 September 31 March
2000 1999 2000
£'000 £'000 £'000
At the beginning of the
period 2,110 2,277 2,277
Finance leases arising on
acquisition - - (12)
Decrease in debt 69 92 144
Increase/(decrease) in cash (1,305) 163 1,698
Movement in short term
deposits with banks (18) (1,302) (1,997)
_______ _______ _______
At the end of the period 856 1,230 2,110
======= ======= =======
c) Analysis of net funds
At 31 March Cashflow At 30 September
Six Months
2000 2000
£'000 £'000 £'000
Cash 3,830 (1,035) 2,795
Short term deposits 206 (18) 188
_______ _______ _______
4,036 (1,053) 2,983
Bank overdraft (1,423) (270) (1,693)
_______ _______ _______
2,613 (1,323) 1,290
Finance leases (72) 31 (41)
Loans (431) 38 (393)
_______ _______ _______
2,110 (1,254) 856
======= ======= =======
6. EARNINGS PER SHARE
Earnings per share has been calculated in accordance with
Financial Reporting Standard 14 by reference to the
following;
Unaudited Unaudited Audited
6 Months to 6 Months to Year to
30 September 30 September 31 March
2000 1999 2000
Pence £'000 Pence £'000 Pence £'000
Loss after
taxation (1.4) (1,025) (2.0) (1,412) (3.0) (2,105)
Add goodwill
amortisation 0.4 319 0.4 284 0.9 613
_______ ______ ______ _______ _____ _______
Adjusted loss
after taxation (1.0) (706) (1.6) (1,128) (2.1) (1,492)
======= ====== ====== ======= ===== =======
Weighted average
number of shares in
issue 72,360,140 68,733,884 70,080,556
Diluted weighted
average number of - - -
shares in issue
__________ __________ __________
72,360,140 68,733,884 70,080,556
========== ========== ==========
7.COMPLETION OF ACQUISITION OF GB MAILING SYSTEMS LIMITED
GB Mailing Systems Limited ('GB') was acquired by the
Group in July 1998. Under the agreement for the
acquisition, deferred consideration was payable to the
vendors of GB two years after the date of the
acquisition, subject to performance. In September and
November 2000, the Group completed the payment of the
deferred consideration for the acquisition of GB. The
total amount of deferred consideration was £3,978,000
which was paid in two tranches:
* in September 2000, £3,378,250 was satisfied by the
allotment and issue of 6,172,575 ordinary shares at
an issue price of 54.73 pence and a payment in cash
of £21,750 to cover vendor expenses; and
* in November 2000, £578,000 was satisfied by the
allotment and issue of 1,302,388 ordinary shares at
an issue price of 44.38 pence.
The authority for the Board to allot the shares and pay
the cash was granted by shareholders at an
Extraordinary General Meeting held at the time of the
acquisition.
The accounts of the Company made up to 31 March 2000
held an amount of £3,400,000 disclosed as shares to be
issued for the earnout deferred consideration. This
was the estimate of the value of the deferred
consideration payable made at the time of the
acquisition in July 1998. At 30 September 2000, an
amount of £578,000 is held within shares to be issued
in respect of the second tranche of deferred
consideration, as satisfied in November 2000.
INDEPENDENT REVIEW REPORT TO TELME.COM PLC
_________________________________________________________
Introduction
We have been instructed by the company to review the
interim financial information for the six months ended 30
September 2000 set out on pages 4 to 9 and we have read
the other information contained in the interim report and
considered whether it contains any apparent misstatements
or material inconsistencies with the financial
information.
Directors' responsibilities
The interim report, including the financial information
contained therein, is the responsibility of, and has been
approved by the directors. The Listing Rules of the
Financial Services Authority require that the accounting
policies and presentation applied to the interim figures
should be consistent with those applied in preparing the
preceding annual accounts except where any changes and
the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance
contained in Bulletin 1999/4 issued by the Auditing
Practices Board. A review consists principally of making
enquiries of group management and applying analytical
procedures to the financial information and underlying
financial data and based thereon, assessing whether the
accounting policies and presentation have been
consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of
controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an
audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an
audit. Accordingly, we do not express an opinion on the
financial information.
Review conclusion
On the basis of our review we are not aware of any
material modifications that should be made to the
financial information as presented for the six months
ended 30 September 2000.
Ernst & Young
Manchester
15 December 2000
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