3rd Quarter Results

Intec Telecom Systems PLC 04 August 2004 4 August 2004 Intec Telecom Systems PLC Unaudited results for the 9 months ended 30 June 2004 Substantial new contracts signed, revenues increased by 41% and EBITA increased by 274% Intec Telecom Systems PLC ("Intec" or "the Company"), a leading global provider of telecoms Operations Support Systems ("OSS") products, is pleased to announce its unaudited results for the nine months ended 30 June 2004, ("Q3 2004"). A 96% increase in new licence sales, with good activity across all product lines, plus solid increases in both recurring income and professional services, have driven revenues up by 41% and adjusted earnings per share by 172%. Trading in the final quarter of the year continues to be healthy, despite ongoing competition in the telecoms sector, and the Board is confident of satisfying full year expectations. In addition the Company announced on 4 June 2004 that it has agreed to acquire the 'Singl.eView' billing and customer care division of ADC Telecommunications ("ADC") for $74.5 million. This transaction, which is subject to shareholder approval, is expected to close later in the summer. The circular to shareholders has been issued today and details can be found in a separate statement made by the Company this morning. FINANCIAL HIGHLIGHTS • Turnover of £46.9 million increased by 41% (9 months ended 30 June 2003 (" 9m 2003"): £33.2 million) with organic and acquisition-driven growth in all key activities. • Gross margin increased to 71% (9m 2003: 68%) reflecting higher margin on improved licence revenue • Earnings before interest, tax, and amortisation ("EBITA") increased to £3.7 million compared with £1.2 million for 9m 2003. • Adjusted EPS increased by 172% to 1.44p (9m 2003: 0.53p). • Revenue and earnings adversely affected by US dollar depreciation, estimated at £2.0 million and £0.8 million respectively. • Operating cash inflow of £0.1 million (9m 2003: inflow of £5.5 million) after working capital investment in acquisitions and to support business growth. • Loss before tax reduced to £2.2 million (9m 2003: loss of £3.9 million), after depreciation and amortisation of goodwill and intangible assets of £7.8 million (9m 2003: £6.7 million). OPERATING HIGHLIGHTS • 51 new contracts since the start of the financial year of which 47 are with new customers. 25 new licences signed in the period plus 26 new bureau customers (9m 2003: 40 new contracts signed, plus 31 through acquisitions). • Notable customer wins announced in Africa, Asia, Eastern Europe, Russia, and the USA. • Customer installations reach 585 in 409 operators - up from 574 at the end of Q2. • 30% increase in investment in product development • Intec retains balance sheet strength with cash and cash equivalent investments of £12.9 million (9m 2003 £14.0 million). "We continue to have strong momentum in the business, with a doubling of new licence revenue," said Intec's Executive Chairman, Mike Frayne. "All regions and product lines are performing well in a market that is very competitive, and we have improved our earnings performance through ongoing cost management, despite the need to invest in a growing business. I believe that Intec can deliver another strong performance for the full year. In addition to this, our announced agreement to acquire the Singl.eView business from ADC will transform Intec into a company capable of delivering to major carriers what we believe will be one of the broadest ranges of OSS products in the world." "Intec has signed many new customers in the past three quarters, including our largest order to date in Indonesia," added Chief Executive Kevin Adams. "Our growing portfolio of major OSS applications enables us to offer our customers a proven range of interoperable systems that they can implement with confidence, knowing that Intec is a successful, stable supplier with global capabilities. The proposed acquisition of Singl.eView builds directly on this capability with an award-winning, tier one retail billing and customer care system used by over 70 carriers." For further information: Mike Frayne, Executive Chairman Intec Telecom Systems PLC +44 (0) 1483 745800 mike.frayne@intec-telecom-systems.com Andrew Rodaway, Director of Marketing Intec Telecom Systems PLC +44 (0) 7768 808082 andrew.rodaway@intec-telecom-systems.com Edward Bridges/James Melville-Ross/Cass Helstrip Financial Dynamics +44 (0) 20 7831 3113 Chairman's and CEO's Statement Intec Telecom Systems PLC - 9 months 2004 Overview Intec is enjoying another successful year in 2004, with the added challenge and excitement of a business-transforming acquisition in progress. Our results for the first nine months of the year show that Intec continues to enjoy substantial growth across the business despite the ongoing pressure within the telecoms sector. The doubling of revenue from new licence wins is particularly pleasing, as we believe new project expenditure remains the most challenging aspect of the entire global software industry. Our growing product portfolio allows us to offer customers a compelling set of key OSS applications that are proven in major operators, and the number of larger deals we have signed for multiple products is a feature of the period under review. In addition, while all our business regions have shown growth, some of the strongest improvements have come from emerging markets in Latin America and Asia-Pacific. Operational review In the first nine months of our business year Intec secured new licence business with 51 customers, allowing us to reach a total of 585 customer installations. During the last few months we have announced new wins with a number of key carriers including Safaricom in Kenya (a Vodafone company), Pakistan's Worldcall Telecom, OTA in Algeria, Energis UK and Telecom Italia. The most outstanding announcement was for a multi-million dollar contract, in Indonesia, for a government-backed interconnect clearing house. This high-profile project will use both Inter-mediatE and InterconnecT, as well as having a substantial professional services component. These wins come in addition to others announced in the period under review, including Nigeria Telecom (Nitel), Golden Telecom (Russia), Romtelecom (Romania), China Unicom, Vivo (Brazil), Telefonica Moviles, Union Telephone (US), Your Communications (UK), Tel-Energo (Poland), ITXC (US), Orange/France Telecom, Telecom Egypt, Telenet (Belgium), Telecom Italia, Sotelma (Mali), M-Tel (Nigeria), and Telecom Malaysia, among others. The balance of business across our four operating regions remains healthy, despite the challenging economic and market conditions, with good growth in all regions. EMEA and North America, the two largest regions, grew 57% and 20% respectively compared to the same period in 2003, while our Central, Latin America and Caribbean region grew 29%. Asia-Pacific was the fastest growing region at 66%, a strong result given the competitive challenges of this typically low labour cost area. New licences were signed for all major products, including 10 InterconnecT family sales, 18 Inter-mediatE sales, 3 Inter-activatE sales, 28 CABS licence or bureau sales and 5 ASF (Digiquant) sales. A number of contracts have been for multiple product licences, some have represented significant competitor replacements, and several have carried substantial, million-Pound plus valuations. We now have over 210 InterconnecT family installations worldwide, over 140 Inter-mediatE installations, 60 Intec ASF (Digiquant) installations and over 135 InterconnecT CABS customers. In 2004 we will run four User Conferences, one in each operating region. Products In the nine months under review we invested over £8.8 million in product development, up almost 30% on the prior period, reflecting the enlarged product set we sell and support. Strong product investment, based on profit-driven business cases, remains our long-term policy, and we will also continue to work closely with customers to understand their future requirements. Intec now has products in interconnect billing, convergent mediation, service activation, dynamic charging (DCP), content partner management (CPM) and IP billing. In the period we have introduced new versions of InterconnecT (v7), Inter-mediatE (v5), and Inter-activatE (v2). Each release includes new features designed to help our carrier customers with the new services they are launching to meet market demand for sophisticated communications products, as well as performance, reliability and cost-of-ownership improvements. Staff and infrastructure Intec has a hard working and productive staff team based in around 20 locations. Our policy is to locate sales and support staff near to the customers they serve wherever possible, and to develop and support products from the most effective locations. Our major offices are in Woking, UK; Atlanta, US; Sao Paulo, Brazil; and Kuala Lumpur, Malaysia. We also have large development centres in Cape Town, South Africa, and Roskilde, Denmark. Our InterconnecT CABS CG operation, including a large datacentre serving many CABS bureau customers, is based in Dallas, Texas. Staff numbers at the end of the third quarter stood at 713, compared with 514 a year ago. We review and adjust our organisational structure to reflect changing priorities in product development, sales/support/marketing focus, and customer needs. Cost management is always a priority at Intec, and the increase in earnings reported this quarter reflects both greater revenues and ongoing cost control across the company. Our regional structure allows us to manage the business effectively at a profit and loss level, with revenues matched to operating costs and margins around the world. Financial analysis Revenue for the period at £46.9 million was up 41% over the equivalent period in 2003 (9m 2003: £33.2 million) with 26% from organic growth. EBITA is substantially higher at £3.7 million (9m 2003: £1.2 million). Although we are able to defray some of the impact of the US$ through lower costs in our US operations, we estimate the impact on revenues and EBITA at £2.0 million and £0.8 million respectively. Adjusted earnings after tax, excluding a charge of £6.0 million for amortisation of goodwill, were £3.0 million (9m 2003: £1.0 million) representing adjusted EPS of 1.44p (9m 2003: 0.53p) Very good new licence sales, up 96% on the previous period, at £11.8 million, contributed to a strong result in a sector which remains competitive. Recurring revenues at £21.3 million are up 23% reflecting a steadily growing customer base and low customer churn. Professional services income also increased to £13.8 million, up 42% as a result of good completion activity on many projects. All regions made satisfactory contributions in the period, with EMEA contributing 46% of turnover, North America 30%, CALA 12% and Asia-Pacific 12%. Gross margin increased to 71% (9m 2003: 68%), reflecting the higher margins of improved licence revenue. All key operating costs rose but mainly at lower rates than revenue growth, suggesting improved efficiency in Intec's business model. Distribution costs rose 34% to £8.7 million as a result of an expanded sales group and increased commission payments from higher sales. General administrative costs increased 51% to £12.2 million, with increases coming from the Digiquant acquisition made in the last quarter of fiscal 2003 and foreign exchange translation differences of £0.6 million. During the period we have taken steps to reduce the exposure on foreign currency movements. Development expenditure was up 28% at £8.9 million with the increase from a broader product portfolio and acquisitions plus substantial investment in new versions of core products. Goodwill amortisation charges have increased from £5.3 million to £6.0 million in the current period, reflecting additional goodwill amortisation from the acquisition of Digiquant. Cash and cash investments have decreased by £2.4 million since 30 September 2003 primarily as a result of seasonal working capital expenditure requirements, overseas tax payments and the depreciation of the US dollar. Operating cash inflow of £0.1 million represents a satisfactory result for a period of investment in new products, acquisition integration and increased working capital expenditure in the enlarged business. Outlook Intec remains a healthy business with increased revenues and earnings, a growing customer base, market leading products and a bright outlook. Our proposed acquisition of the 'Singl.eView' billing and customer care division of ADC will take us into the largest OSS sector, retail billing, with a proven, award-winning product. Providing market conditions remain stable, the Board is confident that our performance in 2004 will satisfy expectations for growth and profitability, and that 2005 will be another year of success for the enlarged business. Mike Frayne, Executive Chairman, and Kevin Adams, CEO. 3 August 2004 FINANCIAL HIGHLIGHTS 9 months ended 30 June 2004 Unaudited Unaudited Audited 9 months 9 months Year ended ended ended 30 June 30 June 30 September Note 2004 2003 2003 £000 £000 £000 TURNOVER 46,921 33,161 50,673 EBITA (i) 3,683 1,165 5,256 EBITDA (i) 5,484 2,596 7,222 Operating loss (2,317) (4,115) (1,914) Basic loss per share (1.45)p (2.25)p (1.59)p Adjusted earnings per share (ii) 1.44p 0.53p 2.17p Notes to the Financial Highlights: (i) Loss before tax (2,214) (3,870) (1,780) Amortisation of goodwill and other intangibles 6,000 5,280 7,170 Net interest income (103) (245) (134) EBITA 3,683 1,165 5,256 Depreciation 1,801 1,431 1,966 EBITDA 5,484 2,596 7,222 (ii) Adjusted earnings per share calculation based on the following adjusted earnings after tax: Loss after tax (3,009) (4,281) (3,042) Amortisation of goodwill and other intangible assets 6,000 5,280 7,170 Adjusted earnings/(loss) after tax 2,991 999 4,128 KEY CUSTOMER DATA 30 June 30 September 30 June 2004 2003 2003 Number Number Number Cumulative: Contracted customer base* 409 386 337 Total contracted installations* 585 551 476 * 30 June 2004 data is shown net of adjustments following redefinition of the criteria for recognising a new customer/installation and in recognition of customer consolidation, e.g. Vivo - three existing customers under one new contract. This does not have a significant impact on recurring revenues. CONSOLIDATED PROFIT AND LOSS ACCOUNT 9 months ended 30 June 2004 Unaudited Unaudited Audited 9 months 9 months Year ended ended ended 30 June 30 June 30 September Note 2004 2003 2003 £000 £000 £000 TURNOVER 2 46,921 33,161 50,673 Cost of sales (13,534) (10,556) (15,172) GROSS PROFIT 33,387 22,605 35,501 Distribution costs (8,659) (6,462) (8,784) Administrative expenses: Development expenditure (8,855) (6,900) (10,073) Amortisation of goodwill and other intangible assets (6,000) (5,280) (7,170) Other administrative expenses (12,190) (8,078) (11,388) Total administrative expenses (27,045) (20,258) (28,631) GROUP OPERATING LOSS (2,317) (4,115) (1,914) Interest receivable and similar income 166 296 340 Interest payable and similar charges (63) (51) (206) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (2,214) (3,870) (1,780) Tax charge on loss on ordinary activities 3 (795) (411) (1,262) RETAINED LOSS ON ORDINARY ACTIVITIES AFTER TAXATION (3,009) (4,281) (3,042) Loss per share - basic 4 (1.45)p (2.25)p (1.59)p CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 9 months ended 30 June 2004 Unaudited Unaudited Audited 9 months 9 months Year ended ended ended 30 June 30 June 30 September 2004 2003 2003 £000 £000 £000 Loss for the period (3,009) (4,281) (3,042) Exchange translation differences arising on foreign currency net investments (786) (206) (278) Total recognised losses during the period (3,795) (4,487) (3,320) CONSOLIDATED BALANCE SHEET 30 June 2004 (Restated -see (Restated -see note 1) note 1) Unaudited Unaudited Audited 30 June 30 June 30 September Note 2004 2003 2003 £000 £000 £000 FIXED ASSETS Intangible assets 63,110 61,430 69,106 Tangible assets 3,943 2,761 4,400 Investments 5 5 5 67,058 64,196 73,511 CURRENT ASSETS Stocks - 29 3 Debtors 5 26,848 16,912 22,648 Investments 5,352 5,412 5,616 Cash at bank and in hand 7,565 8,633 9,724 39,765 30,986 37,991 CREDITORS: amounts falling due within one year 6 (7,049) (3,901) (6,996) NET CURRENT ASSETS 32,716 27,085 30,995 TOTAL ASSETS LESS CURRENT LIABILITIES 99,774 91,281 104,506 CREDITORS: amounts falling due after more than one year 7 (85) - (69) PROVISIONS FOR LIABILITIES AND CHARGES 8 (2,248) - (2,050) ACCRUALS AND DEFERRED INCOME 9 (11,379) (9,603) (12,633) TOTAL NET ASSETS 86,062 81,678 89,754 CAPITAL AND RESERVES Called up share capital 10 2,078 1,906 2,066 Share premium account 10 106,405 238,703 238,697 Other reserve 10 - - 236 Merger reserve 10 6,768 249 6,768 Own shares 10 (96) (96) (96) Foreign exchange reserve 10 (1,772) (914) (986) Profit and loss account 10 (27,321) (158,170) (156,931) EQUITY SHAREHOLDERS' FUNDS 86,062 81,678 89,754 RECONCILIATION OF MOVEMENT IN CONSOLIDATED SHAREHOLDERS' FUNDS 9 months ended 30 June 2004 Unaudited Unaudited Audited 9 months 9 months Year ended ended ended 30 June 30 June 30 September 2004 2003 2003 £000 £000 £000 Loss for the financial period (3,009) (4,281) (3,042) Other recognised losses relating to the period (786) (206) (278) Issue of share capital net of associated expenses 681 54 6,727 (Decrease)/increase in other reserve (236) - 236 Increase in own shares (342) - - (Decrease)/increase in shareholders' funds (3,692) (4,433) 3,643 Opening shareholders' funds 89,754 86,207 86,111 Closing shareholders' funds 86,062 81,774 89,754 CONSOLIDATED CASH FLOW STATEMENT 9 months ended 30 June 2004 Unaudited Unaudited 9 months 9 months Audited ended ended Year ended 30 June 30 June 30 September Note 2004 2003 2003 £000 £000 £000 Net cash inflow from operating activities (i) 144 5,512 8,537 Returns on investments and servicing of finance Interest received 166 291 340 Interest element of finance lease rental payments (21) - - Interest paid and similar items (42) (46) (79) 103 245 261 Taxation Overseas taxation paid (592) (452) (898) Capital investment Payments to acquire tangible fixed assets (1,463) (1,176) (2,056) Proceeds on disposal of fixed assets 2 49 (1,463) (1,174) (2,007) Acquisitions - - Investment in subsidiaries (see note 5) (107) (3,400) (3,694) Net cash acquired with subsidiaries - - 505 (107) (3,400) (3,189) Cash outflow before management of liquid resources and financing (1,915) 731 2,704 Use of liquid resources Decrease/(increase) in cash investments/term deposits 282 (250) (459) Financing Issue of ordinary share capital 106 54 59 Share issues costs charged to the share premium account (5) - (11) Bank loan - 219 221 Repayment of bank loan - (219) (221) Repayment of loan acquired with subsidiaries - - (720) Capital element of finance lease rental (105) - - payments (Decrease)/increase in cash in the period (ii), (1,637) 535 1,573 (iii) NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT 9 months ended 30 June 2004 Unaudited Unaudited 9 months 9 months Audited ended ended Year ended 30 June 30 June 30 September 2004 2003 2003 £000 £000 £000 (i) Reconciliation of operating loss to net cash (outflow)/inflow from operating activities Operating loss (2,317) (4,115) (1,914) Depreciation 1,801 1,431 1,966 Amortisation of goodwill and other intangible 6,000 5,280 7,170 assets Loss/(profit) on disposal of fixed assets 6 36 (5) (Increase)/decrease in stock 1 33 61 (Increase)/decrease in debtors (5,532) 590 (894) Increase/(decrease) in creditors 185 2,257 2,153 Net cash inflow from operating activities 144 5,512 8,537 (ii) Reconciliation of net cash flow to movement in net funds (Decrease)/increase in cash in the period (1,637) 535 1,573 Net cash outflow from decrease in finance lease 105 - - Net cash flow from decrease in debt acquired with - - 720 subsidiary Net cash (inflow)/outflow from (decrease)/increase in liquid resources (282) 250 459 Change in net funds resulting from cash flows (1,814) 785 2,752 Finance leases acquired with the subsidiary - - (210) Debt acquired with the subsidiary - - (720) Translation differences (499) (47) 1 Movement in net funds (2,313) 738 1,823 Net funds at 1 October 15,130 13,307 13,307 Net funds at 30 June / 30 September 12,817 14,045 15,130 (iii) Analysis of movement in net funds ' Audited Unaudited 1 October Exchange 30 June 2003 Cash flow movement 2004 £000 £000 £000 £000 Cash in hand and at bank 9,724 (1,637) (522) 7,565 Term deposits and escrow account 5,616 105 5 5,352 Finance leases (210) (282) 18 (100) 15,130 (1,814) (499) 12,817 Notes to the unaudited interim financial information 9 months ended 30 June 2004 1. BASIS OF PREPARATION The interim financial information has been prepared in accordance with accounting policies set out in, and consistent with, the Group's 2003 financial statements except for the taxation charge for the period which is based on the estimated charge for the year ending 30 September 2004. In addition, under UITF Abstract 38, "Accounting for ESOP trusts", Own shares held through the ESOT (Employee Share Option Trust) have been deducted in arriving at shareholders' funds. The change is retrospective and the comparative balance sheets have been restated to reflect a reclassification of the investment in own shares from Fixed Asset Investments to Shareholders' Funds. The interim financial information is neither reviewed nor audited and does not comprise statutory accounts for the purposes of Section 240 of the Companies Act 1985. The abridged information for the year ended 30 September 2003 has been extracted from the Group's statutory accounts for that period, which have been filed with the Registrar of Companies following the 2003 Annual General Meeting. The Auditor's report on the statutory accounts of the Group for that period was unqualified and did not contain a Statement under either Section 237(2) or Section 237(3) of the Companies Act 1985. The interim financial information was approved by the Board of Directors on 3 August 2004. 1. TURNOVER AND SEGMENTAL REPORTING Turnover by origin Unaudited Unaudited 9 months ended 30 June 2004 9 months ended 30 June 2003 Inter- Inter- Total segment External Total segment External turnover turnover turnover turnover turnover turnover £000 £000 £000 £000 £000 £000 United Kingdom 22,446 (322) 22,124 16,795 (250) 16,545 Continental Europe 3,267 - 3,267 20 - 20 Asia-Pacific 1,519 - 1,519 308 - 308 North America & Canada 20,195 (1,658) 18,537 16,524 (1,256) 15,268 Central and Latin America 1,474 - 1,474 1,020 - 1,020 48,901 (1,980) 46,921 34,667 (1,506) 33,161 Audited Year ended 30 September 2003 Inter- Total segment External turnover turnover turnover £000 £000 £000 United Kingdom 25,965 (576) 25,389 Continental Europe 612 - 612 Asia-Pacific 549 - 549 Africa 765 - 765 North America & Canada 23,528 (1,857) 21,671 Central and Latin America 1,687 - 1,687 53,106 (2,433) 50,673 2. TURNOVER AND SEGMENTAL REPORTING (continued) Turnover by destination Unaudited Unaudited Audited 9 months ended 9 months ended Year ended 30 June 30 June 30 September 2004 2003 2003 £000 £000 £000 United Kingdom 4,989 3,562 5,135 Continental Europe 8,790 7,023 10,979 Eastern Europe 2,868 2,174 2,902 Middle East 441 387 1,077 Africa 4,767 736 1,670 Europe, Middle East and Africa (EMEA) 21,855 13,882 21,763 Asia-Pacific 5,568 3,354 6,621 North America and Canada 13,959 11,638 15,538 Central and Latin America 5,539 4,287 6,751 Total turnover by destination 46,921 33,161 50,673 Turnover by activity Unaudited Unaudited Audited 9 months ended 9 months ended Year ended 30 June 30 June 30 September 2004 2003 2003 £000 £000 £000 Licence sales 11,815 6,029 11,635 Professional services income: Implementation and migrations, consulting and 11,886 7,986 11,620 training Hardware 466 84 113 Non-telecom custom network solutions 1,410 1,644 2,052 13,762 9,714 13,785 Recurring income: ASP Service 2,942 2,509 3,532 Volume upgrade licences 3,377 1,555 3,442 Support and maintenance fees 15,025 13,354 18,279 21,344 17,418 25,253 Total turnover by activity 46,921 33,161 50,673 Profit/loss by origin Unaudited 9 months ended 30 June 2004 Before After amortisation of Amortisation of amortisation of goodwill goodwill goodwill £000 £000 £000 United Kingdom (131) (1,150) (1,281) Continental Europe (1,583) (1,467) (3,050) Asia-Pacific 197 - 197 North America & Canada 5,421 (3,383) 2,038 Central and Latin America (118) - (118) 3,786 (6,000) (2,214) Unaudited 9 months ended 30 June 2003 Before After amortisation Amortisation amortisation of goodwill of goodwill of goodwill £000 £000 £000 United Kingdom 632 (1,885) (1,253) Continental Europe 132 - 132 Asia-Pacific 49 - 49 North America & Canada 135 (3,395) (3260) Central and Latin America 462 - 462 1,410 (5,280) (3,870) Audited Year ended 30 September 2003 After Before amortisation amortisation of goodwill, of impairment goodwill, and impairment and Amortisation of investment investment goodwill write down write down £000 £000 £000 United Kingdom 2,528 (2,574) (46) Continental Europe 384 (69) 315 Asia-Pacific 660 - 660 Africa 594 - 594 North America & Canada 710 (4,527) (3,817) Central and Latin America 514 - 514 5,390 (7,170) (1,780) 2. TURNOVER AND SEGMENTAL REPORTING (continued) Net assets/(liabilities) by origin Unaudited Unaudited Unaudited Unaudited Audited 30 June 30 June 30 June 30 June 30 September 2004 2004 2004 2003 2003 Excluding Including Including Including unamortised Unamortised unamortised unamortised unamortised goodwill goodwill goodwill goodwill goodwill £000 £000 £000 £000 £000 United Kingdom 8,565 2,028 10,593 16,219 13,282 Continental Europe 1,965 8,251 10,216 (145) 11,107 Africa (340) - (340) (227) (219) Asia-Pacific 105 - 105 28 (16) North America & Canada 13,179 51,723 64,902 65,486 65,186 Central and Latin America 586 - 586 413 414 24,060 62,002 86,062 81,774 89,754 2. TAX CHARGE ON LOSS ON ORDINARY ACTIVITIES Unaudited Unaudited Audited 30 June 30 June 30 September 2004 2003 2003 £000 £000 £000 Current taxation: UK corporation tax at 30% (2003: 30%) - - 555 Overseas taxation 787 381 974 Prior year 8 30 (127) Total current tax 795 411 1,402 Deferred taxation: Origination and reversal of timing differences - - (140) Tax on loss on ordinary activities 795 411 1,262 3. (LOSS)/EARNINGS PER ORDINARY SHARE Unaudited Unaudited Audited 9 months ended 9 months ended Year ended 30 June 30 June 30 September 2004 2003 2003 £000 £000 £000 Basic loss (3,009) (4,281) (3,042) Amortisation of goodwill and intangible assets 6,000 5,280 7,170 Adjusted earnings 2,991 999 4,128 Number Number Number Weighted average number of shares 207,595,695 190,522,730 190,889,194 Pence Pence Pence Basic loss per ordinary share (1.45) (2.25) (1.59) Amortisation of goodwill and intangible assets 2.89 2.78 3.76 Adjusted earnings per ordinary share 1.44 0.53 2.17 Diluted loss/earnings per share is not presented in respect of outstanding share options since none of the options are dilutive. 4. DEBTORS Unaudited Unaudited Audited 30 June 30 June 30 September 2004 2003 2003 £000 £000 £000 Trade debtors 14,607 12,807 13,815 Corporation tax recoverable 196 196 196 Overseas tax recoverable 79 85 Deferred tax 253 96 240 Other debtors 64 106 438 Prepayments and accrued income: Prepayments due within one year 2,421 1,125 1,456 Prepayments due after more than one year 564 - 589 Accrued income due within one year 8,664 2,582 5,829 26,848 16,912 22,648 5. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR Unaudited Unaudited Audited 30 June 30 June 30 September 2004 2003 2003 £000 £000 £000 Bank loans and overdrafts - - 125 Obligations under finance leases 100 - 141 Trade creditors 3,015 1,438 2,233 Corporation tax 1,147 454 1,169 Overseas tax 152 308 625 Other creditors including taxation and social security 2,635 1,275 2,604 Deferred/contingent consideration - 426 99 7,049 3,901 6,996 6. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR Unaudited Unaudited Audited 30 June 30 June 30 September 2004 2003 2003 £000 £000 £000 Obligations under finance leases 85 - 69 7. PROVISIONS FOR LIABILITIES AND CHARGES Unaudited Unaudited Audited 30 June 30 June 30 September 2004 2003 2003 £000 £000 £000 Lease incentive (i) 517 - - Onerous leases (ii) 1,731 - 2,050 Total 2,248 - 2,050 (i) Lease incentives The balance relates to lease incentives which will be recognised over the life of the lease over a period to September 2012. (ii) Onerous leases The amounts disclosed above relate to future estimated losses on sub-let lease commitments acquired with the Digiquant Group. Amounts provided relate to the period up to the first option to break on two properties in Denmark and Atlanta, USA. The first option to break on the Denmark lease is in 2011 and accordingly the provision above includes the discounted fair value of the future losses up to this point. 8. ACCRUALS AND DEFERRED INCOME Unaudited Unaudited Audited 30 June 30 June 30 September 2004 2003 2003 £000 £000 £000 Amounts falling due within one year Accruals 4,524 3,080 5,924 Deferred income 6,855 6,523 6,709 11,379 9,603 12,633 9. STATEMENT OF MOVEMENTS ON RESERVES Called Share Foreign Profit up share premium Merger Other exchange and loss capital account reserve Reserve Own shares reserve account Total £000 £000 £000 £000 £000 £000 £000 £000 At 1 October 2,066 238,697 6,768 236 (96) (986) (156,931) 89,754 2003 Issue of shares 12 327 - (236) - - - 103 Reduction of share premium - (132,619) - - - - 132,619 - Retained loss - - - - - - (3,009) (3,009) Foreign exchange translation - - - - - (786) - (786) At 30 June 2004 2,078 106,405 6,768 - (96) (1,772) (27,321) 86,062 This information is provided by RNS The company news service from the London Stock Exchange

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