Preliminary Results
Telme.Com PLC
14 June 2001
TELME.COM PLC
Preliminary Results for the Year Ended 31 March 2001
Highlights
* Strong organic growth across all of the Group's
divisions resulted in turnover and gross profit
increasing by 29% and 30% to £18.1 million (2000:
£14.0 million) and £14.0 million (2000: £11.0 million)
respectively. Over the last three years turnover has
grown by over 460%.
* The Group operating losses for the full year, before
exceptional costs and the amortisation of goodwill,
were much reduced at £0.8 million (2000: £1.5
million). The Group remained committed to Research
and Development during the year with expenditure of
£1.9 million.
* The Customer Relationship Management (CRM) division saw
particularly strong expansion of its database
outsourcing business with new clients including Thomas
Cook, De Vere Hotels, N Power and Trinity Mirror.
* The Group's Corporate Travel division achieved turnover
growth of 40% from its existing customers and from new
customers including ARM and Mondex.
* The Group's Internet travel service, TelMe Global
Traveller (www.telme.com) saw gross sales grow to an
annualised level of £9.0 million in May 2001 from an
annualised level of £5.0 million in May 2000, an
increase of 80%.
* Cash balances at 31 March 2001 were £1.8 million (2000:
£4.0 million). The overdraft was £0.5 million (2000:
£1.4 million) giving net cash balances available to the
Group of £1.3 million (2000: £2.6 million).
* Commenting on the results, Sir Gordon Brunton,
Chairman, said: 'Your Company has been transformed
over the past few years and is now well placed with
excellent products, services and people. Your
directors are confident of continued progress during
the current year. A challenging budget has been set
to achieve profitability and early indications are
encouraging.'
For further information, please contact:
TelMe.com plc
Graham Ramsey, Chief Executive 020 7240 2640
Richard Law, Group Finance 0151 608 0205
Director
Golin/Harris Ludgate
Richard Hews 020 7324 8888
Trish Featherstone
CHAIRMAN'S STATEMENT
During the year your Company has made good progress
towards profitability. Turnover has grown significantly
by 29% and major cost cuts were achieved at the end of
the year involving the closure of the Prenton site and
staff rationalisation.
We have continued to invest in the development of the
Online Services Division. TelMe Global Traveller is now
well established and continues to grow. The major
development costs associated with this project are now
behind us. The Group's established CRM and Corporate
Travel divisions improved their performance and
underlying profitability.
The financial highlights of the year were:
* Gross sales increased to £71.2 million (2000: £51.6
million) and turnover increased to £18.1 million (2000:
£14.0 million).
* The Group operating loss for the year before
exceptional costs and the amortisation of goodwill, was
£0.8 million (2000: £1.5 million).
* Cash balances at 31 March 2001 were £1.8 million
(2000: £4.0 million). The overdraft was £0.5 million
(2000: £1.4 million) giving net cash balances available
to the Group of £1.3 million (2000: £2.6 million).
Divisional Review
Customer Relationship Management (CRM) Division
The turnover in this division increased by 21%. As a
result, the division generated operating profits of £1.4
million before goodwill amortisation and management
charges compared to £1.2 million last year. The Group's
CRM division currently accounts for around 61% of the
Group's turnover and the Directors believe that the
future prospects for this business are very good.
Online Services Division
Turnover in the Group's Online Services division
increased by 63%, compared to 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. The
operating loss for the year before goodwill, management
charges and exceptional costs was £1.9 million (2000:
£1.8 million). With the business rationalisation that
took place at the end of the year, the performance of
this business has improved markedly in the current year.
Corporate Travel Division
The Corporate Travel division has performed strongly and
is now generating much improved results. Considerable
work has been carried out over the last two years to
improve and replace systems and reorganise management,
which is now proving successful. Turnover rose by 40%
and operating profits before goodwill amortisation and
management charges were £0.9 million (2000: £0.1 million
loss).
Aborted Acquisition
The disappointment in an otherwise positive year was the
necessity to abort an important acquisition in the CRM
market due to the departure through illness of the
managing director of our CRM division. Terms had been
agreed and required funds of some £10 million had been
provisionally raised. Exceptional costs of £0.3 million
were incurred in connection with the aborted acquisition.
Prospects
Your Company has been transformed over the past few years
and is now well placed with excellent products, services
and people. Your directors are confident of continued
progress during the current year. A challenging budget
has been set to achieve profitability and early
indications are encouraging.
Sir Gordon Brunton
Chairman
FINANCIAL AND OPERATING REVIEW
Overview
As explained in the Chairman's statement, the Group
continued the trend of recent years and achieved
significant growth across all of its operations during
the year.
The Group's gross sales were £71.2 million (2000: £51.6
million) and turnover reached £18.1 million compared to
£14.0 million in 2000, an increase of 29%.
The Group maintained its gross profitability at
approximately 80% and normal operating expenses grew less
quickly than turnover to yield much reduced operating
losses, before exceptional costs and goodwill
amortisation, of £0.8 million (2000: £1.5 million). The
exceptional costs relate to the closure of the Group's
Prenton site and costs associated with a potential
acquisition which did not proceed to completion.
Exceptional costs amounted to £0.6 million (2000: £Nil).
Goodwill amortised during the year was £0.7 million
(2000: £0.6 million).
The retained loss for the year after goodwill and
exceptional items was £2.1 million (2000: £2.1 million).
Cash balances at the year end were £1.8 million (2000:
£4.0 million). The overdraft was £0.5 million (2000:
£1.4 million) giving net cash balances available to the
Group at 31 March 2001 of £1.3 million (2000: £2.6
million).
Gross Sales
Gross sales represent the value of goods and services
invoiced to customers for which the Group is responsible.
This includes the value of amounts invoiced for bought in
services from airlines and other operators which are
charged on to customers by the Corporate Travel division
and the Online Services division. The Group earns
commissions and fees as a result of generating gross
sales. These commissions and fees are disclosed under
turnover for the Group.
Turnover
Turnover increased during the year by 29% to £18.1
million (2000: £14.0 million). This increase was
attributable to organic growth within our existing
businesses. The turnover performance of the divisions
is discussed below.
Customer Relationship Management (CRM)
This division comprises the activities of GB Information
Management ('GB') and DataCare, both of which provide
software and services to major corporates to enable them
to manage their relationships with customers effectively.
Turnover increased 21% to £11.1 million (2000: £9.2
million) principally as a result of the expansion of
outsourced services for the management of customer
databases. Significant business wins during the year
included N Power, Thomas Cook and Bank of Ireland.
Online Services
This division comprises the Group's Internet and travel
technology businesses. Turnover in the year was derived
from the following sources:
* the sale of Ticket Window travel booking software to
travel agents;
* the sale of Farebase fares data to travel agents;
* the sale of business and leisure travel over the
Internet through the TelMe Global Traveller service
(www.TelMe.com); and
* the sale of Online business information.
Turnover within the Online Services division increased
during the year by 63% overall. Ticket Window software
turnover was up by 36%, Farebase fares data turnover was
up by 48% and TelMe Global Traveller commission income
was up by over 300%. In May 2001, annualised ticketed
sales through TelMe Global Traveller were £9.0 million
compared to £5.0 million in May 2000.
Corporate Travel
The Corporate Travel division experienced strong growth
during the year in both its core oil services markets and
in its new and growing markets of technology and business
services. A significant number of important business
wins of customers such as ARM and Mondex enabled record
growth in commission turnover of 40% to be
achieved on gross sales of £53 million. This
business is now the 15th largest business travel agent in
the UK.
Gross Profit and Cost of Sales
Gross profit for the year increased by 31% from £11.0
million to £14.4 million. The increase was as a direct
result of higher turnover across all of the Group's
activities. Expressed as a percentage of turnover, gross
margin for the Group was 80% (2000: 79%).
Other Operating Expenses
Other operating expenses excluding goodwill amortisation
and exceptional items were £15.2 million (2000: £12.5
million). On a like for like basis operating expenses
increased by 21% which compares favourably with increase
in turnover of 29% and increase in gross profit of 31%.
Operating expenses were increased by an annualised £2
million in the final quarter of the year in order to
expand significantly the sales resource within the CRM
division. This increase in costs which is aimed at
rapidly expanding sales will be partially offset during
the current year by cost savings of around £0.7 million
achieved as a result of rationalisation elsewhere.
Exceptional operating costs of £0.6 million have been
recognised in respect of provisions and redundancy costs
arising from the closure of the Online business
information service, the closure of the Group's Prenton
site and costs associated with an acquisition which did
not proceed to completion. Including these exceptional
costs, other operating expenses were £15.8 million.
Goodwill Amortisation
The goodwill amortisation charge for the year ended 31
March 2001 was £0.7 million (2000: £0.6 million).
Operating Loss
The net operating loss for the year before goodwill
amortisation and before exceptional items was £0.8
million (2000: £1.5 million). After the amortisation of
goodwill and exceptional costs, the operating loss was
£2.1 million (2000: £2.1 million). During the year a
number of functions were centralised and the recharge of
costs to the divisions for central services was reviewed
and amended. This has resulted in a reclassification of
costs across the Group. Accordingly, further explanation
of comparatives are provided where necessary. The
operating performance of the Group's divisions is
discussed below.
Customer Relationship Management
This division generated operating profits before goodwill
amortisation and management charges of £1.4 million
(2000: £1.2 million). After goodwill amortisation of
£0.4 million (2000: £0.4 million) and management charges
of £0.3 million (2000: £nil), the operating profit for
the year was £0.7 million (2000: £0.7 million). The
operating profit benefited this year from a number of
rescheduled software licence renewals, which contributed
a one-off £0.2 million towards the operating result.
Online Services Division
The Online Services division incurred an operating loss
before goodwill amortisation, management charges and
exceptional costs of £1.8 million (2000: loss of £1.8
million). After taking account of goodwill amortisation
of £0.1 million (2000: £0.1 million), management charges
of £0.1 million (2000: nil) and exceptional
rationalisation costs, the operating loss was £2.1
million (2000: £1.8 million). During the first quarter
of the year, marketing launch costs of the TelMe Global
Traveller service of £0.5 million were incurred which
contributed significantly towards the operating loss.
Continued growth of this service was achieved during the
remainder of the year by exploiting innovative affiliate
deals with partners such as Egg and The Independent and
direct marketing costs reduced accordingly.
Higher sales of all continuing products and services
together with the rationalisation of the business at the
end of the year have resulted in a marked improvement in
performance in the early months of the current year.
Corporate Travel Division
The Corporate Travel division performed extremely well
during the year as a result of growth within existing
markets, new customer wins and the use of technology and
improvement of systems to increase operational
efficiency. The operating profit before goodwill
amortisation and management charges increased by £1.0
million to £0.9 million compared with a loss of £0.1
million in the previous year. After goodwill
amortisation of £0.2 million (2000: £0.2 million), and
management charges of £0.4 million (2000: nil) the
operating profit was £0.3 million (2000: loss £0.2
million).
Central Costs
Central costs incorporate the costs of the Group's head
office function. Head office costs before exceptional
costs and the recharge of costs to divisions were £1.3
million (2000: £0.8 million). The increase in costs
during the year was associated primarily with increased
commercial activity aimed at growing the business of the
operating divisions. After the recharge of management
costs to divisions central costs were £0.5 million (2000:
£0.8 million) increasing to £1.0 million after the
inclusion of exceptional costs.
Interest receivable less payable
Interest is earned on cash balances which are invested in
accordance with the Group's treasury policy. Interest
payable arises on mortgages, loans, finance leases and
overdrafts. Net interest receivable during the year
reduced in line with reduced net cash balances.
Taxation
The Group did not incur a taxation charge in the year.
At 31 March 2001, the Group had losses carried forward
of £19.6 million (2000: £19.3 million).
Amounts transferred from reserves
The amount transferred from reserves to cover trading
losses was £2.1 million (2000: £2.1 million).
Financial Instruments
The Group's principal financial instruments comprise bank
loans, finance leases and hire purchase contracts, cash
and short term deposits. The main purpose of these
financial instruments is to finance the Group's
operations. An analysis of these financial instruments
is given in note 19 to the accounts. The Group has other
financial instruments such as trade debtors and trade
creditors, that arise directly from its operations.
Balance Sheet and Liquidity
Explanations of the most significant movements in the
balance sheet during the year are as follows:
Intangible Assets
The carrying value of intangible assets at 31 March 2001
was £11.6 million (2000: £11.8 million). During the
year, additional goodwill of £0.6 million arose on the
ending of the earn out period in respect of the
acquisition of GB Mailing Systems. The total
consideration paid for the acquisition of GB Mailing
Systems, including the earn out payment, was £9.0 million
comprising £7.0 million in new ordinary shares and £2.0
million of cash. The carrying values of goodwill on
acquisitions and other intangible assets was reduced
during the year by amortisation in accordance with the
Group's accounting policies by £0.7 million and £0.2
million respectively.
Cash and Short Term Deposits and Liquidity
At 31 March 2001, the Group had cash and short term
deposits of £1.8 million (2000: £4 million). The Group
also had overdrafts within its Corporate Travel division
of £0.5 million (2000: £1.4 million) giving net cash
available to the Group of £1.3 million (2000: £2.6
million). The level of overdraft required within the
Corporate Travel division has reduced significantly
despite the increased working capital required to fund
the £13.0 million expansion in gross sales. This has
occurred as a result of a focused strategy to collect
debtors more quickly. Over the year, the average debtor
collection period has been reduced by 11% and the Group
remains committed to managing its liquidity tightly.
The principal uses of cash during the year were the net
investment in Group fixed assets of £0.5 million (2000:
£0.4 million) and the repayment of the capital element of
finance leases and loans of £0.1 million (2000: £0.1
million). Operating activities absorbed cash of £0.7
million (2000: £0.7 million).
R A Law
Group Finance Director
GROUP PROFIT AND LOSS ACCOUNT
Year ended 31 March 2001
Continuing Exceptional Continuing
Operations Items Operations
before after
exceptionals exceptionals
Note
2001 2001 2001 2000
£000 £000 £'000 £'000
Gross Sales
Customer Relationship 11,081 - 11,081 9,181
Management
Online Services 7,240 - 7,240 2,498
Corporate Travel 52,876 - 52,876 39,917
------- ------- ------- -------
71,197 71,197 51,596
------- ------- ------- -------
Turnover
Customer Relationship 11,081 - 11,081 9,181
Management
Online Services 2,133 - 2,133 1,306
Corporate Travel 4,875 - 4,875 3,487
------- ------- ------- -------
18,089 - 18,089 13,974
Cost of sales (3,693) - (3,693) (2,965)
------- ------- ------- -------
Gross profit 14,396 - 14,396 11,009
Other operating expenses 1. (15,228) (599) (15,827) (12,540)
(excluding goodwill
amortisation)
Goodwill amortisation (654) - (654) (613)
------- ------- ------- -------
Operating (loss) / profit
Customer Relationship
Management 655 - 655 745
Online Services (1,939) (176) (2,115) (1,818)
Corporate Travel 333 - 333 (246)
Central Costs (535) (423) (958) (825)
------- ------- ------- -------
(1,486) (599) (2,085) (2,144)
Interest receivable less payable 2 39
------- -------
Loss on ordinary
activities before
taxation (2,083) (2,105)
Taxation - -
------- -------
Loss on ordinary
activities after taxation (2,083) (2,105)
Dividend - -
------- -------
Amount transferred from
reserves (2,083) (2,105)
------- -------
Loss per 2.5p ordinary
share (pence) 2. (2.8)p (3.0)p
------- -------
Loss per 2.5p ordinary
share (pence) - diluted (2.8)p (3.0)p
------- -------
Adjusted loss per 2.5p
ordinary share (pence) -
before goodwill
amortisation and
operating exceptional
items (1.1)p (2.1)p
------- -------
GROUP BALANCE SHEET
As at 31 March 2001
2001 2000
£'000 £'000
Fixed assets
Intangible assets 11,602 11,838
Tangible assets 1,848 2,178
------- -------
13,450 14,016
------- -------
Current assets
Stocks 1 1
Debtors 7,744 6,752
Cash and short-term deposits 1,786 4,036
------- -------
9,531 10,789
Creditors : amounts falling due within one year (7,534) (7,745)
------- -------
Net current assets 1,997 3,044
------- -------
Total assets less current liabilities 15,447 17,060
Creditors : amounts falling due after more than
one year (358) (443)
------- -------
15,089 16,617
------- -------
Capital and reserves
Called up share capital 1,991 1,805
Share premium account 31,219 31,219
Merger reserve 11,526 7,757
Shares not yet issued - 3,400
Profit and loss account (29,647) (27,564)
------- -------
Shareholders' funds attributable to equity
interests 15,089 16,617
------- -------
GROUP STATEMENT OF CASH FLOWS
Year ended 31 March 2001
2001 2001 2000 2000
£'000 £'000 £'000 £'000
Net cash outflow from operating
activities (673) (653)
Returns on investments and
servicing of finance
Interest received 151 199
Interest paid (140) (154)
Interest element of finance lease
rental payments (4) (6)
------- -------
7 39
Taxation
Corporation tax paid (6) (92)
Capital expenditure
Payments to acquire tangible
fixed assets (520) (470)
Receipts from the sale of
tangible fixed assets 43 54
------- -------
(477) (416)
Acquisitions and disposals
Acquisitions of subsidiary
undertakings (22) (42)
Net cash acquired with subsidiary
undertakings - 29
------- -------
(22) (13)
------- -------
Cash outflow before use of
management of liquid resources
And financing (1,171) (1,135)
Management of liquid resources
Cash withdrawn from short term
deposits 13 1,997
Financing
Proceeds from issue of ordinary
shares - 990
Share issue costs - (10)
Repayment of capital element of
finance leases (53) (100)
Repayment of capital element of
loans (79) (44)
------- -------
(132) 836
------- -------
(Decrease) / increase in cash (1,290) 1,698
------- -------
Notes to the accounts:
1. Included in other operating expenses are exceptional
costs which can be analysed as follows:
2001 2000
£000 £000
Provision for impairment of
Prenton site 149 -
Write-off of assets no longer
used 131 -
Provision for redundancy and
other closure costs 69 -
Costs of aborted acquisition 250 -
------ ------
599 -
------ ------
2. Earnings per share has been calculated in accordance
with Financial Reporting Standard 14 by reference to
a loss of £2,083,000 (2000: £2,105,000) and a
weighted average number of shares in issue of
75,710,981 (2000: 70,080,556).
3. (a) Reconciliation of operating loss to net cash
outflows from operating activities
2001 2000
£'000 £'000
Operating loss (2,085) (2,144)
Depreciation 662 542
Goodwill amortisation 654 613
Amortisation of
intangible fixed assets 160 160
Provision against
tangible fixed assets 149 -
(Profit)/loss on disposal
of tangible fixed assets (4) 6
Increase in debtors (997) (726)
Decrease in stocks - 10
Increase in creditors 788 886
------ ------
Net cash outflows from
operating activities (673) (653)
------ ------
Cash flow includes £230,000 (2000: £Nil) for
operating exceptional costs.
(b) Reconciliation of net cash flow to movement in
net funds
2001 2000
£000 £'000
At the beginning of the
year 2,110 2,277
Finance leases arising
on acquisition - (12)
Decrease in debt 132 144
(Decrease) / increase in
cash (1,290) 1,698
Movement in short term
deposits with banks (13) (1,997)
------- -------
At the end of year 939 2,110
------- -------
4. The above financial information does not constitute
statutory accounts as defined in Section 240 of the
Companies Act 1985. The financial information for
the year ended 31 March 2001 has been extracted from
the statutory accounts on which an unqualified audit
opinion has been issued. Statutory accounts for the
year ended 31 March 2001 will be delivered to the
Registrar in due course. The preliminary
announcement is prepared on the same basis as set out
in the previous year's statutory accounts. The
comparative financial information 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.
5. The Company intends to dispatch to shareholders
printed copies of the full annual report and
accounts for the year to 31 March 2001 before the
end of June 2001.
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