Interim Results
IBNet PLC
13 December 2002
IBNet Plc
Company number 3904195
Interim Report
Six months ended
30 September 2002
Contents
Contents.
Directors and advisers.
Chairman's statement.
Profit and loss account for the period ended 30 September 2002.
Balance sheet as at 30 September 2002.
Cash flow statement for the period ended 30 September 2002.
Notes to the financial statements for the period ended 30 September 2002.
Issued 13 December 2002
Directors and advisers
Directors
David Gordon Heynes
Chairman
Toby John Smallpeice
Chief Executive
Richard Jeremy Saul
Non-Executive Director
David John Lees
Non-Executive Director
Michael Norman Bull
Non-Executive Director
Company Secretary
Toby John Smallpeice
Registered Office
Hogarth Centre
Hogarth Lane
Chiswick
London W4 2QN
Company number 3904195
Registrars
Capita IRG plc
Bourne House
34 Beckenham Road
Beckenham
Kent BR3 4TU
Websites
www.ibnetplc.com
www.webgravity.co.uk
www.webwurld.com
Nominated Adviser and
Broker
Old Mutual Securities
Old Mutual Place
2 Lambeth Hill
London EC4V 4GG
Auditors
Grant Thornton
London Thames Valley Office
Churchill House
Chalvey Road East
Slough
Berks SL1 2LS
Solicitors
Theodore Goddard
150 Aldersgate Street
London EC1A 4EJ
Bankers
HSBC plc
Broad Street
Reading
Berks RG1 2BU
Barclays Bank plc
5 High Road
Willesden
London NW10 2JE
Chairman's statement
The Directors have pleasure in reporting the results of the company for the six
months ended 30th September 2002.
Financial Results
The turnover for the six months to 30 September 2002 amounted to £933,000
(£468,000 six months to 31December 2001). There was an operating loss before
exceptional items, goodwill amortisation, depreciation and interest of £304,000
(£1,178,000 six months to 31 December 2001) and a loss before tax of £668,000
(£1,689,000 six months to 31 December 2001). On an annualised basis our
turnover is continuing to show solid growth although quieter trading conditions
in the summer resulted in a loss at the operating profit level. However,
despite revenue having hit a low point in June, monthly sales have picked up in
each subsequent month since.
Review of Activities
During the summer Richard Saul stepped down to become a non-executive director
and since then we have reorganised our management structure, by both recruitment
and promoting staff internally. We continue to review all our products and
services to ensure that they are fresh and appeal to our customers.
Netdetec
As stated in the year-end report, we are continuing to streamline the overhead
and maintenance cost of providing the Netdetec services. These savings have
already significantly reduced the cost of providing the service, at the same
time as improving the range of features available. Some of this saving has been
passed to the customer with a new modular pricing structure that is more
accessible, affordable and transparent for customers and channel resellers
alike. Although average revenue per customer is now lower, new customer numbers
have increased and lead times have been significantly reduced. The net effect of
these changes has yet to feed through to revenue growth - during the six months
Netdetec turnover amounted to £245,000 (£249,000 six months to 31 December
2001). However, the reduced cost base means that the product line has started to
contribute positively to earnings.
Search Engine Optimisation (SEO) and Search Engine Marketing (SEM)
Our SEO and SEM services sold more slowly than hoped for during the summer but
have been steadily building since June. Turnover for SEO and SEM products and
services for the six months to 30 September 2002 was £427,000 (£160,000 six
months to 31 December 2001 - Webgravity contributions began 1 November 2001).
Significant government and corporate business is now being won, including a
recent contract for the DTI, and when combined with an expanding service
offering, further sales growth is expected. A head of client services, with a
combination of agency, client side and industry experience has recently been
recruited to increase our retention and cross sell rates to the existing
customer base.
WebWurld
Webwurld sales have continued to prosper during the six months to 30 September
2002. We have added AltaVista paid inclusion to our growing product range and
launched a professional version aimed directly at other SEO companies. We have
also expanded the service beyond Europe to 8 regions in the South East Asian
market under a recent arrangement with Lycos Asia. Sales for the six months
were £261k (£59k six months to 31 December 2001 - Webgravity contributions began
on 1 November 2001). Despite the significant growth in revenue overheads have
remained constant for this segment of the business, which is largely Internet
based.
FINANCE
As was clear from our balance sheet at 31 March 2002, which showed cash
resources of £43,000 remaining from the funds originally raised in March 2000,
liquidity was always going to be an issue during the rest of 2002. The board
has addressed this issue in three ways.
Firstly, Toby Smallpeice, CEO, has waived his bank guarantee against Loan Note
funds secured by funds on deposit, enabling the bank to release £200,000 to the
company to help meet immediate working capital needs.
Secondly, as was announced on 31 October 2002, the company entered into a share
exchange agreement with New Opportunities Investment Trust plc for a nominal
amount of £344,000. These shares are now shown in the balance sheet as a
current asset, subject to an embargo on sale until 25th December 2002.
Thirdly, as was announced on 19 November 2002, we placed 5,000,000 new ordinary
shares to raise £125,000 in cash.
These measures have strengthened the Company's financial position which should
allow the Company to make further progress in building the business during 2003
and beyond.
PROSPECTS
Clearly economic conditions still contain many uncertainties, but your board
looks forward to the remainder of the 2003 year with reasonable confidence based
upon our experience this autumn.
Our stated aims of developing a cash generative basis business in the year to 30
March 2003 remain on track.
I would like to thank the executive directors and staff for their enthusiasm and
hard work over an uncertain period.
With the company's financial resources now more secure, we all looking forward
to a successful six months trading.
David Heynes
Chairman
Dated 13th December 2002
Profit and loss account for the period ended 30 September 2002
6 Months 6 Months 9 Months
to 30 Sep 02 to 31 Dec 01 to 31 Mar 02
Unaudited Unaudited Audited
NOTES £'000 £'000 £'000
TURNOVER
- NetDectec 245 249 393
- Search Engine Marketing (*) 427 160 639
- WebWurld (*) 261 59 156
933 468 1,188
COST OF SALES (310) (88) (200)
GROSS PROFIT 623 380 988
ADMINISTRATIVE EXPENSES
- Amortisation of investment (242) (91) (202)
- Other administrative expenses (1,041) (1,662) (2,274)
(1,283) (1,753) (2,476)
Exceptional Item 2 - (343) (379)
OPERATING PROFIT / (LOSS) (660) (1,716) (1,867)
NET INTEREST 3 (8) 27 24
LOSS ON ORDINARY ACTIVITIES (668) (1,689) (1,843)
TAXATION - - -
TOTAL LOSS AFTER TAXATION FOR PERIOD (668) (1,689) (1,843)
BASIC AND FULLY DILUTED LOSS PER SHARE 4 0.89p 2.74p 3.06p
There were no other recognised gains or losses other than the loss for the
period.
All operations are continuing.
The accompanying accounting policies and notes form part of these financial
statements.
* Comparative sales figure represents trading following the acquisition of
Webgravity Ltd on 1 November 2001.
Balance sheet as at 30 September 2002
As at 30 Sep 02 As at 31 Dec 01 As at 31 Mar 02
Unaudited Unaudited Audited
NOTES £'000 £'000 £'000
FIXED ASSETS
Investments 5 1,979 2,332 2,221
Tangible fixed assets 6 428 501 456
2,407 2,833 2,677
CURRENT ASSETS
Investments recoverable after one year 7 252 - 450
Debtors recoverable within one year 8 284 461 623
Cash at bank and in hand 39 679 43
575 1,140 1,116
CURRENT LIABILITIES
Creditors:
- Amounts falling due within one year 9 (1,066) (1,512) (1,011)
Net current assets (491) (372) 105
Total assets less current liabilities 1,916 2,461 2,782
Creditors:
- Amounts falling due after more than one
year 9 (485) - (583)
Provision for liabilities and charges 10 (673) (900) (773)
758 1,561 1,426
CAPITAL AND RESERVES
Called up share capital 13 13,938 13,938 13,938
Share premium account 14,371 14,352 14,371
Profit and loss account (27,551) (26,729) (26,883)
Equity shareholders' funds 758 1,561 1,426
The financial statements were approved by the Board of Directors and signed on
their behalf on 12 December 2002.
T. J. Smallpeice
Director
Cash flow statement for the period ended 30 September 2002
6 Months 6 Months 9 Months
to 30 Sep 02 to 31 Dec 01 to 31 Mar 02
Unaudited Unaudited Audited
NOTES £'000 £'000 £'000
Net cash outflow from operating activities 14 89 (1,123) (1,282)
Returns on investments and servicing of
finance
Interest received 7 28 34
Interest paid (15) (1) (10)
(8) 27 24
Capital expenditure and financial investments
Purchase of tangible fixed assets (85) (163) (163)
Purchase of current asset investment - - (450)
Purchase of investment in subsidiary
undertaking - (73) (73)
(85) (236) (686)
Net cash outflow before financing (4) (1,332) (1,944)
Management of liquid resources
Cash placed on fixed term deposits - - -
Sale of short term investments 205 - 1,700
205 - 1,700
Financing
Capital element of finance lease rentals (3) (1) (6)
New Loans & Loan Notes issued (4) - -
Loan Notes repaid (198) - -
Expenses paid in connection with share issues - (29) (48)
(205) (30) (54)
(Decrease)/increase in cash (4) (1,362) (298)
Notes to the financial statements for the period ended 30 September 2002
1. BASIS OF PREPARATION
The interim financial statements have been prepared in accordance with
applicable accounting standards and under the historical cost convention.
The principal accounting policies of the company have remained unchanged from
those set out in the company's annual report and financial statements for the
nine-month period ending 31 March 2002.
The comparative figures shown are for the six-month period ended 31 December
2001 and the nine-month period ended 31 March 2002.
2. EXCEPTIONAL ITEM
The exceptional item recorded in the nine months to 31 March 2002 (£379,000)
represents the costs of restructuring the business following the acquisition of
Webgravity as regards redundancies and the closure of operations in Egham.
3. NET INTEREST
6 Months to 6 Months to 9 Months to
30 Sep 02 31 Dec 01 31 mar 02
£'000 £'000 £'000
Interest payable and other similar charges (15) (1) (10)
Interest receivable and other similar income 7 28 34
(8) 27 24
4. LOSS PER SHARE
The calculation for the basic loss per share is based upon the loss attributable
to ordinary shareholders divided by the weighted average number of shares on
issue during the period. Reconciliation of the loss and weighted average number
of shares used in the calculations are set out below:
6 Months to 6 Months to 9 Months to
30 Sep 02 31 Dec 01 31 mar 02
Loss on ordinary activities before taxation (£'000) (668) (1,689) (1,843)
Weighted average number of shares 74,952,000 61,618,666 60,226,725
Amount of loss per share in pence 0.89p 2.74p 3.06p
5. FIXED ASSET INVESTMENT
Subsidiary undertakings Amortisation /
impairment losses
Cost Net book value
£'000 £'000 £'000
As at 1 April 2002 24,399 (22,178) 2,221
Additions - - -
Charge for the period - (242) (242)
As at 30 September 2002 24,399 (22,420) 1,979
6. TANGIBLE FIXED ASSETS
Leasehold Fixtures & fittings Computer equipment TOTAL
improvements
£'000 £'000 £'000 £'000
Cost
At 31 March 2002 - 118 610 728
Additions - - 85 85
Disposals - - - -
At 30 September 2002 - 118 695 813
Depreciation
At 1 April 2002 - 50 222 272
Provided in period - 15 98 113
Eliminated on disposals - - - -
At 30 September 2002 - 65 320 385
Net book value
At 30 September 2002 - 53 375 428
At 31 March 2002 - 68 388 456
The figures stated above include assets held under hire purchase contracts as
follows:
Leasehold Fixture & fittings Computer equipment TOTAL
improvements
£'000 £'000 £'000 £'000
Net book value
At 30 September 2002 - - 9 9
Depreciation provided in period - - 4 4
7. CURRENT ASSET INVESTMENT
As at As at As at
30 Sep 02 31 Dec 02 31 Mar 02
£'000 £'000 £'000
Short term deposit 252 - 450
The short-term investment represents funds held on deposit to meet the company's
future loan note liabilities, falling due for payment within one year.
8. DEBTORS
As at As at As at
30 Sep 02 31 Dec 02 31 Mar 02
£'000 £'000 £'000
Trade debtors 233 431 583
Other debtors 21 5 8
Prepayments and accrued income 30 25 32
284 461 623
9. CREDITORS
As at As at As at
30 Sep 02 31 Dec 01 31 Mar 02
Amounts falling due within one year £'000 £'000 £'000
Trade creditors 451 885 314
Social Security and other taxes 255 210 211
Other creditors 16 10 14
Accruals and deferred income 337 400 465
Amounts due under hire purchase contracts 7 7 7
1,066 1,512 1,011
As at As at As at
30 Sep 02 31 Dec 01 31 Mar 02
Amounts falling due after more than one year £'000 £'000 £'000
Loan notes on issue 255 - 450
Loan notes due for issue 227 - 127
Amounts due under hire purchase contracts 3 - 6
485 - 583
All amounts fall due after one and within two years.
The loan notes represent part of the consideration for the acquisition of
Webgravity Limited.
10. PROVISIONS FOR LIABILITIES AND CHARGES
As at As at As at
30 Sep 02 31 Dec 01 31 Mar 02
£'000 £'000 £'000
Opening provision 773 - -
Provided during period - 900 900
Reduction in provision via loan notes due for issue (100) - (127)
Closing 673 900 773
The provision represents the balance of loan notes to be raised as part of the
consideration for the acquisition of Webgravity Limited less amounts earned
under the performance criteria set in the sale agreement. The provision of
£673,000 is contingent on the results of the business during the earn-out period
up to and including August 2003.
11. CAPITAL COMMITMENTS
At 30 September 2002 and 31 March 2002 the company had no capital commitments.
12. CONTINGENT LIABILITIES
As part of the consideration for the acquisition of Webgravity Limited, the
company may have to make a maximum potential payment of £2,550,000 through the
issue of loan notes. Of this amount, £900,000 was provided for in the financial
statements based on the expected results of the business during the earn-out
period up to and including August 2003. This comprises £227,000 loan notes due
for issue, included within creditors and £673,000 of provisions. The directors
are of the opinion that it is unlikely that the company will be obliged to pay
any of the remaining £1,650,000.
There were no other contingent liabilities in the company at 31 March 2002 or 30
June 2001.
13. Share Capital
During the period there was no share capital movement other than 480,000 options
granted to employees under the company's Executive Share Option Scheme. The
exercise price for these options was 5.10p per share.
14. NET CASH OUTFLOW FROM OPERATING ACTIVITIES
6 months to 6 months to 9 months to
30 Sep 02 31 Dec 01 31 Mar 02
£'000 £'000 £'000
Operating loss (660) (1,716) (1,488)
Depreciation 113 104 149
Fixed asset investment amortisation/impairment 242 91 202
Loss on sale of fixed assets - 7 26
Exceptional item associated with purchase of
subsidiary undertaking - (343) (379)
(Increase) / decrease in debtors 339 (208) (370)
Increase / (Decrease) in creditors and deferred
income 55 942 578
Net cash flow from operating activities 89 (1,123) (1,282)
15. Dividend
The directors are not declaring a dividend.
16. Post balance date events
As part of ensuring the company's financial security, the following significant
events have taken place since the date of the financial statements.
• Funds on deposit previously held as security to meet loan note obligations
have been released and made available for working capital purposes (funds
made available £200k).
• New Opportunities Investment Trust PLC acquired 10,500,000 shares in IBNet
PLC.
• On 31 October 2002 8,000,000 ordinary shares were issued at 4.3p in
exchange for 344,000 shares and 68,000 warrants of New Opportunities
Investment Trust PLC ('NOIT'). IBNet are unable to trade in the NOIT shares
prior to 25 December 2002 under the terms of this exchange. Following this
issue NOIT held 18,500,000 ordinary shares representing 22.3% of the
enlarged issued share capital of IBNet PLC.
• A private placement of 5,000,000 ordinary shares for a cash consideration
of £125,000 was announced on 19th November 2002. Funds raised from this
placement were applied to the reduction of trade creditors.
• As at the date of this report the enlarged share capital of IBNet is
87,952,000 ordinary shares.
17. Copies of Interim statements
Copies of the interim statement are being sent to shareholders and are available
to the public from the Company's registered office at Hogarth Centre, Hogarth
Lane, Chiswick, London W4 2QN. Copies of the results can also be viewed online
at www.webgravity.co.uk.
This information is provided by RNS
The company news service from the London Stock Exchange
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