Interim Results
Interregnum PLC
15 February 2001
Interregnum PLC Interim
INTERREGNUM PLC
Financial results for the six months to 31 December 2000
Interregnum plc ('Interregnum') today reports its interim results showing
growth in its investment portfolio, people and profits which substantiate its
position as a leading European, US-style IT advisory and investment firm.
Interregnum floated on the UK's AIM market in March 2000. (ITR.L)
Highlights:
Financial results
. Like-for-like value of the portfolio* (excluding equities purchased)
increased during the period by 2% to £11.7m (30th June 2000: £11.46m).
Absolute value of portfolio* increased by 15% to £13.23m (30th June 2000:
£11.46m)
. Turnover increased year on year by 18% to £731,000 (31st December
1999:£621,000)
. Profit after tax and interest up to £9,000 (31st December 1999: loss
£39,000) after a 50% increase in head count to 27
. Earnings per share of 0.03p basic and 0.02p fully diluted
Corporate progress
. 7 investments made during this period totalling £2.8m
. One prior period investment return of £1.25m
. Nine new professionals recruited with an aggregate 82 years experience in
the IT industry
. £75m venture capital fundraising progressing well
* based on BVCA valuation criteria
Commenting on the results, Ken Olisa, Chairman and Chief Executive of
Interregnum, said:
'I am delighted to report interim results that show continued growth and
profitability. These results underline our ability to apply our IT sector
knowledge and capital to build a valuable portfolio of companies in order to
generate substantial value for our shareholders.
'In line with our strategy, we have significantly expanded our team. The
considerable IT industry experience of our new recruits enables us to make and
manage an even wider range of investments in a growing number of high quality
technology companies.
'In terms of expansion, I am also pleased to report a very encouraging
response from institutional investors towards the fundraising of our £75
million venture capital fund. This exercise is progressing well.
'I believe these results are particularly favourable at a time when others
have been forced to write off significant amounts of their portfolios.'
For further information please contact:
Ken Olisa, Chairman and Chief Executive
Interregnum plc Tel: 020 7494 3080
Paul Downes/Vanessa Maydon
Merlin Financial Tel: 020 7606 1244
Attached: Extracts from the Chairman's Statement
Consolidated Profit and Loss Account
Consolidated Balance Sheet
Cash Flow Statement
Notes to the Accounts
Extracts from the Chairman and Chief Executive's Statement
Introduction: growth in portfolio value, people and profits
It gives me great pleasure to report our Interim results for the six months to
December 31st 2000.
When we floated on London's AIM exchange in March 2000 we described a strategy
to achieve our mission - Transforming Technology into Wealth. Put simply, we
apply our IT sector knowledge and financial capital to build a valuable
portfolio of companies capable of achieving wealth-creating exits from either
trade sales or flotations.
Successful implementation of that model depends on two principal factors:
. the quality of our IT sector knowledge and its application
. the quantity of capital that we are able to deploy
In the period since our own stock exchange listing we have grown the value of
our portfolio both on a like-for-like basis and in absolute terms and we have
successfully recruited some of the most talented professionals in the IT
industry. We are also progressing with our plans to raise a £75 million fund
targeted exclusively at our advisory clients.
These achievements have been made against a backdrop of considerable
instability elsewhere in the sector which, in contrast to our own position,
has led many players to write down their portfolios and to shed staff.
Although the outlook for the economy at large and for the technology sector in
particular remains somewhat uncertain, we are confident that our unique
combination of sector expertise and capital will enable us to continue to
generate wealth for the shareholders of both our clients and Interregnum.
Results
Portfolio value growth: As with all companies, the inherent value of
Interregnum depends on our capacity to generate future free cash-flows from
our business. That capability depends entirely on the increase in value and
potential liquidity of our portfolio clients. We seek to optimise those
factors via our Venture Marketing line of business by establishing a highly
active relationship with each company in which we have a share holding. This
ensures that we are close to the day-to-day activities of each company and are
therefore able to apply the full force and benefit of our Research &
Consulting, M&A and Venture Capital capabilities to the needs of each client.
Although each of our lines of business generate fees, the true value of these
relationships lies in the equity (both purchased and 'sweat') that we own in
each company.
At the beginning of this fiscal year (July 1st 2000) the Interregnum portfolio
consisted of 29 holdings collectively valued at £11,461,094. At the half-year
point (December 31st 2000), the like-for-like value of the portfolio
(excluding equities purchased during the period) had increased by 2% to
£11,680,094 and the absolute value (including equities purchased) had grown by
15% to £13,230,000 bringing the total portfolio holdings to 32.
During the six months, we made the following investments and we were repaid
£1,250,000 of debt together with interest from Datapoint Group.
Company Activities £000 % Purchased % Total Holding
Respond UK Plc CRM softwareand services 1,000 14.3 17.3
Computerwire.com
Limited Online IT intelligence
and analysis 250 2.2 9.9
Vocalex Group Speech recognition
Inc. software 690 16.2 26.8
Nanomagnetics High density disk
Limited storage technology 500 2.8 2.8
Sapphire Application development
International tools
Limited 50 2.5 3.8
Raidtec Fault tolerant
Corporation storage systems
Limited 0* 0.2 0.2
Best People IT recruitment agency
Group Plc 40 - -
Datapoint European Contact
Group Centre Services (1,250) - -
*Bridging loan of £270,000, which has been repaid. Warrants awarded at par.
People: expanding our sector expertise and coverage: Central to our ability to
build substantial value for our shareholders is the attraction and retention
of the best IT marketing talent in the industry. Since July 1st of last year,
we have been able to increase our team by 9 professionals bringing to over 204
the number of years of sector experience within our company. Those joining us
included:
Name Employment Experience Years in IT sector
Andrew de Abreu Energis, Worldcom, Nixdorf 11
Michael Fish Platform Computing, Hewlett
Packard, ECsoft, Valid Logic
(formerly part of Cadence) 18
Rupert Cook CAP Gemini, Anthony Cook Northern,
ICE Dynamics 12
Stuart Keeler Diagram Systems, C-Dilla, Bookthat 10
Peter Denison-Pender Hudson Venture Partners 3
Karen Whiteley Braxton Associates, e-result plc 5
James Foulk * IDC 3
Regina Dubrovskaya * Giga Information Group 3
Arthur Hochberg * ASK Group Ltd, Ingres, Informix,
Dataquest, Gartner 17
Total 82
*Due to commence Jan-Feb 2001
We have successfully managed this substantial increase in the size of our
company using our proprietary methodologies based on the Four Pillars of
Value(C). This approach enables us to apply our knowledge systematically and
therefore to scale our organisation by providing a basis for consistent
training of new personnel.
Other Key Aspects of Financial Performance: In addition to increasing the
value of the Portfolio, overall revenues for the period grew by 18% to
£731,000 (1999: £621,000) and, despite the 50% increase in headcount to 27
people (1999: 18), the company produced a small profit after interest and
taxes of £9,000, an improvement over the previous half-year loss of £39,000.
The only disappointing aspect has been the increase in the debtors balance.
We believe this to be a symptom of the travails of the IT sector in recent
months. However the accounts include a provision for the at-risk proportion
and we have instituted a programme of actions to bring down the balance over
the next few months.
Outlook
The performance of the European IT sector is heavily dependent on the
behaviour of the US public markets and realistically we expect things to
remain unsettled for some time to come. Concerns about the US economy are
affecting NASDAQ prices generally and a slow-down in US spending on IT and
telecommunications is clearly depressing the earnings of major players adding
further market nervousness. These effects, combined with the 'dot.com
fall-out' have restored a welcome sense of normality to the sector. While this
situation is likely to continue to reduce the prospects for technology company
IPOs we anticipate an increase in the activity levels of strategic
partnerships and trade sales. This will result from established companies
seeking to bolster their competitive positions by augmenting their brands with
the people, technologies and markets of younger businesses.
We believe that this is good news for Interregnum and for our clients. Our
systematic approach to developing businesses has enabled us to avoid the
extremes of the recent past and to concentrate on the fundamental principle
that true enterprise value is a function of a company's ability to generate
cash.
With unprecedented deal flow, a quality team and funds to invest, I am
optimistic about our ability to continue to take advantage of the market for
the benefit of our clients, their shareholders and the shareholders of
Interregnum.
Ken Olisa
Chairman & CEO
Note: If you would like further information about the company, please refer to
our website www.interregnum.com or call us for a copy of the full interim
statement and/or a copy of the 2000 Annual Report and Accounts.
Consolidated profit and loss account
Six months ended 31 December 2000
Note Six months Six months to Year to 30
to 31 December 31 December June
2000 1999 2000
(unaudited) (unaudited) (audited)
£000 £000 £000
Turnover 2 731 621 1,486
Administrative expenses (1,405) (693) (1,918)
Other operating income 46 39 89
Operating loss (628) (33) (343)
Other income - profit on realisation of
Investment 96 - 178
- other 569 2 335
Interest payable (28) (8) (25)
Profit/(loss) on ordinary activities
before taxation 9 (39) 145
Taxation - - (25)
Retained profit/(loss) for the period 9 (39) 120
Earnings per share - basic 3 0.03p - 0.26p
- fully diluted 3 0.02p - 0.19p
Statement of total recognised gains and losses
Six months Six months to Year to 30
to 31 December 31 December June
2000 1999 2000
(unaudited) (unaudited) (audited)
£000 £000 £000
Profit/(loss) for financial period 9 (39) 120
Unrealised surplus on revaluation
of fixed asset investments 219 14 4,900
Realised gains on fixed asset investments - - (41)
Total recognised gains/(losses)
for the financial period 228 (25) 4,979
Consolidated balance sheet
Six months Six months to Year to 30
to 31 December 31 December June
2000 1999 2000
(unaudited) (unaudited) (audited)
£000 £000 £000
Fixed assets
Tangible assets 361 96 217
Investments 13,230 1,413 11,461
13,591 1,509 11,678
Current assets
Debtors 1,367 392 844
Cash at bank and in hand 11,534 - 13,904
12,901 392 14,748
Creditors: Amounts falling due in one
year (814) (427) (583)
Net current assets 12,087 (35) 14,165
Total assets less current liabilities 25,678 1,474 25,843
Creditors: Amounts falling due after
more than one year - (41) (398)
25,678 1,433 25,445
Capital and reserves
Called up share capital 3,262 2,508 3,249
Share premium 18,877 - 18,877
Revaluation reserve 6,224 1,399 6,013
Merger reserve (2,407) (2,037) (2,407)
Profit and loss account (278) (437) (287)
25,678 1,433 25,445
Consolidated cash flow statement
Note Six months Six months to Year to 30
to 31 December 31 December June
2000 1999 2000
(unaudited) (unaudited) (audited)
£000 £000 £000
Net cash flows from operating
activities 4 (833) 5 (140)
Returns on investments and
servicing of finance 196 (6) 134
Taxation (10) - (3)
Capital expenditure and financial
investment (1,736) (5) (5,535)
Cash outflow before use of liquid
resources and financing (2,383) (6) (5,544)
Financing 14 (12) 19,618
(Decrease)/increase in cash (2,369) (18) 14,074
Reconciliation of net cash flow to movement in net debt
Six months Six months to Year to 30
to 31 December 31 December June
2000 1999 2000
(unaudited) (unaudited) (audited)
£000 £000 £000
(Decrease)/increase in cash in
the period (2,369) (18) 14,074
Decrease in debt and lease financing 6 12 17
Loan 7 75 (375)
Exchange movements (12) - (21)
Change in net debt (2,368) 69 13,695
Net funds/(debt) at 1 July 2000 13,498 (272) (197)
Net funds/(debt) at 31 December 2000 11,130 (203) 13,498
Notes to the Interim financial statements
For the six months to 31 December 2000
Basis of preparation
The interim financial statements have been prepared on the basis of the
accounting policies set out in the Group's statutory accounts for the year
ended 30 June 2000, and are unaudited. The interim financial statements do not
constitute statutory financial statements within the meaning of section 240 of
the Companies Act 1985.
Comparative figures for the year ended 30 June 2000 are an abridged version of
the Group's full accounts which carry an unqualified audit report.
Turnover
By geographical market
Six months Six months to Year to 30
to 31 December 31 December June
2000 1999 2000
(unaudited) (unaudited) (audited)
£000 £000 £000
United Kingdom 556 485 1,162
Rest of Europe 12 11 27
USA and Canada 163 125 297
731 621 1,486
Earnings per share
Basic earnings per share of 0.03p (6 months to 31 December 1999 nil, and year
to 30 June 2000 0.26p) are based on a profit for the period of £9,400 (6
months to 31 December 1999 nil, and year to 30 June 2000 £120,396) and a
weighted average ordinary 5p shares in issue during the period of 65,014,357
(6 months to 31 December 1999 nil, and year to June 2000 45,530,929).
Basic earnings per share of 0.02p (6 months to 31 December 1999 nil, and year
to 30 June 2000 0.19p) are based on a profit for the period of £9,400 (6
months to 31 December 1999 nil, and year to 30 June 2000 £120,396) and a
weighted average ordinary 5p shares in issue during the period of 90,581,564
(6 months to 31 December 1999 nil, and year to 30 June 2000 63,024,988).
Cash flows
Six months Six months to Year to 30
to 31 December 31 December June
2000 1999 2000
(unaudited) (unaudited) (audited)
£000 £000 £000
Reconciliation of operating loss to net cash flow from operating activities
Operating loss (628) (33) (343)
Depreciation 43 16 39
Profit on sale of fixed asset investments 96 - 136
Increase in debtors (177) (1) (297)
(Decrease)/increase in creditors (179) 23 304
Exchange loss 12 - 21
Net cash flow from operating activities (833) 5 (140)
Interim Statement
Copies of the Interim statement are being sent to shareholders. Additional
copies will be available to the public free of charge from the Company's
registered office: 22/23 Old Burlington St, London W1S 2JJ.
Statement of Directors
The interim financial statements set out on pages 7 to 11 have been approved
by the Directors and have been prepared on a basis consistent with the audited
financial statements for the year ended 30 June 2000.