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Enter a valid email address PLC (WLK)

  Print      Mail a friend       Annual reports

Monday 25 March, 2002 PLC

Preliminary Results PLC
25 March 2002

Monday, 25 March 2002

                Core business performs well in a difficult year

                      Business well placed for the upturn plc, (WLK.LSE) the company that helps quoted companies and mutual
funds attract and retain well informed private investors, announces preliminary
unaudited results for the 12 months ended 31 December 2001.


•        2001 trading results in line with October update

•        Underlying turnover up 42.9% to £19.7 million (up 21.7% excluding

•        Underlying operating profit down 44.4% to £1.0 million (up 2.9%
         excluding acquisitions)

•        Reported operating loss for the year of £42.3 million is after a
         goodwill charge of £42.7 million, exceptional costs of £0.7 million and 
         a profit from discontinued operations of £0.1 million

•        Andersson & Nilsson exceeded expectations

•        Restructured US acquisitions will deliver £0.5 million incremental
         benefit from cost savings in 2002

•        Cash balances at end 2001 of £8.6 million (1p per share)

•        Channel partner relationships grown to 228

•        Investor database now exceeds 2 million

Nigel Wray, Chairman, said:

'Our original core business made remarkably good progress in 2001 despite
difficult market conditions, but US acquisitions were disappointing. We have
decided to make a prudent goodwill impairment charge. We remain cash generative
and cash rich and are well positioned to succeed in the current economic climate
and to benefit when the upturn comes.'

Peter Wakeham, Chief Executive Officer, said:

'2001 was a record year for The Club Annual Reports Service, The Club Fund Info
Service and for Andersson and Nilsson. Vcall and Informed Investors have been
successfully re-structured with year on year benefit from cost savings of £0.5

We do not believe that we can count on better market conditions for any support
in 2002 and therefore improved performance versus 2001 must result from our own
initiatives. Our focus is on developing our enlarged core business to its full
potential. It is early days, but 2002 has started well and we are trading in
line with expectations.'

For further information, please contact: plc
Peter Wakeham, Chief Executive Officer                       +44 (0)20 7436 2403
Nigel Burton, Chief Financial Officer                        +44 (0)20 7436 2352

Financial Dynamics
Fiona Meiklejohn                                             +44 (0)20 7831 3113

Copies of this release, plus a webcast and slides of the presentation of these
results being made to analysts and institutional shareholders will be available
today from 10am on the website

Chairman's Statement

Our original core business - The Club Annual Reports Service and The Club Fund
Info Service - continued to grow strongly to record levels, with revenues ahead
by 21.7% and operating profits ahead by 2.9%. Growth would have been even faster
had investor and client sentiment not been adversely affected by the tragic
events of 11th September. The initial contribution from Andersson & Nilsson (our
Swedish business acquired early in the year) exceeded expectations.

By contrast the US acquisitions (made early in the year to give us a broader
product offering) fell well short of initial expectations. They were loss making
when we acquired them but revenue growth was slower than forecast and trading
losses continued throughout the year. We quickly took remedial action and both
businesses have now been successfully restructured and relocated. We took a
non-recurring charge of £0.7 million in 2001 for the exceptional costs
associated with this restructuring.

Overall, profit before tax, excluding goodwill amortisation and exceptional
costs, of the continuing WILink business was £1.4 million, 36.3% lower than for
2001. The profit and loss account reports a loss before tax of £42.6 million for
the year principally as the result of a prudent decision to reduce the amount of
goodwill in the accounts in total by £42.7 million. This decision was taken as a
consequence of the difficult market conditions discussed in the review of
operations below. Going forward, the annual charge for goodwill amortisation
will be less than £2 million per annum.

We are recommending action to make the shares more attractive to institutional
investors. A resolution will be proposed to shareholders at the AGM to
consolidate the share capital of the Company by combining the 1p ordinary shares
into £2.50 shares on the basis of one £2.50 share for every 250 existing 1p
shares.  Residual holdings of less than 250 shares will be sold on behalf of
shareholders for cash, which will be sent to shareholders as soon as practicable

2002 has started well and we are trading in line with expectations:

  • The Club Annual Reports Service, Andersson and Nilsson and The Club Fund
    Info Service continue to enjoy momentum

  • Operating costs for Vcall and Informed Investors have been reduced
    following relocation, with the incremental benefit in 2002 expected to be
    £0.5 million

  • We expect to benefit from greater brand recognition and media coverage
    as a result of our proposal to unify all corporate communications under the
    WILink brand. We have renamed our principal subsidiaries as WILink Ltd and
    WILink Inc. and are recommending to Shareholders that we change the Company 
    name to WILink plc

  • We intend to find ways to extract further value from our substantial and
    growing database through strategic alliances

We believe our services are well positioned to succeed in the current economic
climate and to benefit when the upturn comes.

Nigel Wray
25 March 2002

Review of Operations

2001 was one of the most difficult trading years we have experienced since the
company was founded in 1989.

  • The macro-economic downturn in North America and Europe, especially in the
    technology and telecoms sectors, led to a reduction in companies listed on
    most major stock exchanges and caused many existing and prospective clients
    to reduce their expenditures on Investor Relations activities
  • Falling share prices and a steady flow of profit warnings weakened
    sentiment generally and reduced investor appetite for financial information
  • Equity Mutual Funds in North America experienced a $549 billion reduction
    in net asset values from $3.96 trillion to $3.41 trillion and mutual fund
    marketing expenditures were drastically cut
  • The tragic events of September 11th had a direct adverse impact on our
    revenues due to the US stock markets being closed for several days and
    client losses and investor indecisiveness during the subsequent weeks of
    aftershock and uncertainty

Against this market environment, our performance this year has many positive

  • The Club Annual Reports Service had another record year
  • The Club Fund Info Service in North America performed very well in a
    difficult year for the industry
  • Andersson & Nilsson, a Swedish business acquired in early 2001, had an
    excellent debut year and performed well ahead of our expectations
  • We had an outstanding year in terms of quality and service to our clients
    and customers

However, these many successes were overshadowed by the performance of the two US
businesses acquired in early 2001, Informed Investors and Vcall. Both of these
companies were loss making when we purchased them but we had expected to restore
them to profitability by the end of the year. Unfortunately, in the difficult
macro-economic and stock market environment in the US, the growth in revenues
fell well short of expectations and the losses continued throughout 2001 with a
major adverse effect on earnings.

We took the decision in September to close the separate facilities of each
business (Informed Investors in Sacramento and Vcall in Philadelphia) and to
relocate their operations to our North American Headquarters in Richmond,
Virginia. We did this in early December with no adverse impact on service
quality to clients or customers and with virtually no loss of key personnel who
are among the most experienced in the industry. The cost reduction resulting
from the reduced headcount and office costs was approximately £1.3 million on an
annualised basis. As part of the benefit from this cost cutting was reflected in
the 2001 results, the incremental benefit in 2002 is expected to be
approximately £0.5 million.

Trading outlook

After eleven weeks of trading we are performing in line with expectations, but
market conditions remain uncertain. We do not believe that we can count on
better market conditions for any support in 2002 and therefore improved
performance versus 2001 must result from our own initiatives.

Major North American and European stock markets have recovered from the rapid
drop in values following September 11th but all indices remain stubbornly below
early 2001 levels.  Moreover, prospects of corporate earnings recovery remain
elusive and companies in sectors such as media, technology and telecoms are
still extremely cautious about their expectations for the year.

On the positive front, there have been welcome signs during the past few weeks
that the US economy is recovering and there are encouraging indicators that
individual investor sentiment is strengthening.

Stronger economies, corporate profit improvement and increased investor
confidence would benefit our business but, based on current evidence, the impact
of these is unlikely to be felt before the fourth quarter of 2002 and perhaps
not until 2003.

On the marketing front, our priority in 2002 is to develop our existing product
range to its full potential. In the UK we have launched The Club Fund Info
Service in the new Financial Times Fund Management supplement FTfm. Moreover, we
are now offering to distribute Vcall webcasts via the Regulatory News Service
(RNS) channels of the London Stock Exchange, accessing over 250,000 trading
desks as well as our extensive investor customer database

Peter Wakeham
Chief Executive Officer
25 March 2002

Statements made in this release that state the Company's or management
intentions are forward looking statements.  The Company's actual results could
differ materially from those projected in the forward looking statements, and
there can be no assurance that estimates of future results will be achieved

Financial Review

The Consolidated Accounts include the activities of the Group throughout the
year, including those of David Conrad International (a majority interest in
which was sold on 5 February 2001). The Consolidated Accounts show turnover for
the year of  £20.6 million and a loss after tax and minorities of £42.9 million.

The continuing WILink businesses

The table below shows the five year trend in the continuing business of WILink,
combining data extracted from the Consolidated Accounts with the audited figures
relating to Inc prior to its acquisition by the Company in July

WILink five year trend - excluding discontinued businesses

Year ended 31                                       2001        2000        1999        1998        1997
£ 000s
Sales Revenue                                     19,679      13,775      11,321       8,239       6,308
Growth                                             42.9%       21.7%       37.4%       30.6%           -
Cost of sales                                    (6,741)     (4,965)     (4,584)     (3,520)     (2,516)
Gross Margin                                      12,939       8,810       6,736       4,719       3,792
Growth                                             46.9%       30.8%       42.8%       24.4%           -
Gross Margin                                       65.7%       64.0%       59.5%       57.3%       60.1%
Total Administrative
expenses excluding
exceptional items                               (11,979)     (7,082)     (5,110)     (3,623)     (2,931)
Operating Profit
(excluding transaction
costs, exceptional items
and goodwill amortisation)                           960       1,727       1,626       1,096         861
Growth                                            -44.4%        6.2%       48.4%       27.2%           -
Interest - net                                       446         483          68          17          18
Pre-tax Profit (excluding
transaction costs,
exceptional items,
goodwill amortisation
and loss on disposals)                             1,406       2,210       1,694       1,113         880
Growth                                            -36.3%       30.5%       52.2%       26.6%           -

The pro-forma figures above exclude a number of additional non-trading items
which are shown in the following accounts, of which the most significant is the
charge for goodwill amortisation and impairment. As a result of the acquisition
of Inc in 2000 by the Company for £53.1 million, goodwill of £51.0
million was created, and further goodwill of £9.1 million arose as a result of
the three acquisitions made in 2001. Since the interim results, a further
goodwill impairment review using the methodology specified in FRS11 has been
undertaken. As a result, the Directors have taken a prudent decision to reduce
the amount of goodwill, resulting in a total goodwill amortisation charge for
the year of £42.7 million. The accounts reflect this non-cash charge, following
which the goodwill remaining on the balance sheet, which relates entirely to the
former W-I-Link and A&N businesses is reduced to £12.5 million.

Based on the continuing strong performance of the former W-I-Link business, the
Directors believe that it is prudent to extend the remaining period over which
the related £9.4 million goodwill is amortised to the end of June 2010.
Amortisation of the remaining £3.1 million goodwill related to A&N will continue
until the end of February 2006.


In accordance with the published dividend policy, no dividends were paid or are
proposed for the year. However, the Board will consider whether to bring forward
proposals for dividend payments later in the year. It is possible that a
reduction in share capital may be necessary to permit payment of dividends,
which would require approval by shareholders at an EGM and approval by the High
Court, and therefore the Group is unlikely to pay a dividend until after the AGM
in 2003.

Publication of non-statutory accounts

The financial information contained in this preliminary announcement does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985. The financial information for the preceding year is based on the statutory
accounts for the year ended 31 December 2000. Those accounts, upon which the
auditors issued an unqualified opinion, have been delivered to the registrar of

Group Profit and Loss                                            2001                            2000
Account for the year ended 31                               unaudited                         audited
December                                                            £                               £

- Continuing operations                                    16,768,697                       6,572,148
- Acquisitions                                              2,910,650                               -
                                                           19,679,347                       6,572,148
- Discontinued operations                                     934,840                      10,201,919
TOTAL TURNOVER                                             20,614,187                      16,774,067

Cost of sales                                             (7,455,405)                    (10,953,400)

GROSS PROFIT                                               13,158,782                       5,820,667

Administrative expenses
 - Exceptional administrative
expenses                                                    (710,564)                       (142,973)
 - Other administrative expenses                         (12,060,673)                     (4,758,073)
 - Amortisation and impairment of
goodwill                                                 (42,652,858)                     (5,224,177)

Total administrative expenses                            (55,424,095)                    (10,125,223)

Operating loss
- Continuing operations                                  (35,286,907)                     (4,576,658)
- Acquisitions                                            (7,109,823)                               -
                                                         (42,396,730)                     (4,576,658)
- Discontinued operations                                     131,417                         272,102
OPERATING LOSS                                           (42,265,313)                     (4,304,556)
Profit on disposal of fixed asset
investment                                                      3,839                               -
Loss on disposal of discontinued
operations                                                  (284,080)                               -

Loss on ordinary activities
before interest                                          (42,545,554)                     (4,304,556)

Interest receivable and similar
income                                                        463,922                         595,064
Amount written off fixed asset
investment                                                  (498,539)
Interest payable and similar
charges                                                      (16,081)                        (56,915)

LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION              (42,596,252)                     (3,766,407)
Tax on loss on ordinary activities                          (319,562)                       (540,666)

LOSS ON ORDINARY ACTIVITIES AFTER TAXATION               (42,915,814)                     (4,307,073)

Equity                                                         28,713                        (54,617)

RETAINED LOSS FOR THE YEAR                               (42,887,101)                     (4,361,690)

Loss per share
- basic                                                       (4.91)p                         (1.04)p
- diluted                                                     (4.91)p                         (1.04)p

Group Balance Sheet                                              2001                            2000
at 31 December                                              unaudited                         audited
                                                                    £                               £
Intangible                                                 12,532,484                      46,122,268
Tangible                                                      693,916                         798,481
Investments                                                   880,069                         551,831

                                                           14,106,469                      47,472,580

Stocks                                                              -                         653,343
Debtors                                                     4,215,586                       6,135,839
Cash at bank                                                8,646,085                      17,696,837

                                                           12,861,671                      24,486,019

CREDITORS: amounts falling due
 within one year                                          (4,041,759)                     (8,529,833)

NET CURRENT ASSETS                                          8,819,912                      15,956,186

TOTAL ASSETS LESS CURRENT LIABILITIES                      22,926,381                      63,428,766

CREDITORS: amounts falling due
 after more than one year                                           -                         (1,567)
Provisions for liabilities and
charges                                                   (2,151,881)                               -
                                                           20,774,500                      63,427,199

Equity                                                              -                       (144,502)

                                                           20,774,500                      63,282,697

Called up share capital                                     9,245,803                       8,642,671
Share premium account                                      13,788,746                      13,437,394
Shares to be issued                                           196,328                         450,000
Other reserves                                             45,201,871                      45,012,773
Profit and loss account                                  (47,658,248)                     (4,260,141)

TOTAL EQUITY SHAREHOLDERS' FUNDS                           20,774,500                      63,282,697

Group Statement of Total Recognised                              2001                            2000
Gains and Losses                                            unaudited                         audited
for the year ended 31 December                                      £                               £

Loss for the financial year                              (42,887,101)                     (4,361,690)

Exchange difference on
retranslation of net assets of
subsidiary undertaking                                         11,244                          24,758

TOTAL RECOGNISED GAINS AND LOSSES RELATED TO THE YEAR    (42,875,857)                     (4,336,932)

Reconciliation of                                                2001                            2000
Shareholders' Funds                                         unaudited                         audited
at 31 December                                                      £                               £
Total recognised gains and
losses for the year                                      (42,875,857)                     (4,336,932)
New shares issued and exercises
of options                                                    621,332                      61,896,067
Shares to be issued as
consideration for acquisition                                 196,328                               -
Waiver of shares to be issued on
 acquisition of David Conrad
(International) Limited                                     (450,000)                               -

Total movements during the year                          (42,508,197)                      57,559,135
Shareholders' funds at 1 January                           63,282,697                       5,723,562

31 DECEMBER                                                20,774,500                      63,282,697

Group Statement of Cash                                            2001                            2000
Flows                                                           audited                         audited
at 31 December                                                        £                               £
NET CASH INFLOW/(OUTFLOW) FROM OPERATING ACTIVITIES           1,763,318                     (1,279,569)

Interest element of finance leases                                (870)                           (846)
Interest received                                               636,633                         414,950
Interest paid                                                  (15,211)                        (56,069)

SERVICING OF FINANCE                                            620,552                         358,035

TAXATION                                                      (422,952)                     (1,031,845)

Payments to acquire tangible fixed
assets                                                        (148,863)                       (148,711)
Payments to acquire investments                               (429,505)
Receipts from sale of fixed asset
investments                                                       9,839                               -

NET CASH OUTFLOW FROM CAPITAL EXPENDITURE                     (568,529)                       (148,711)

Purchase of subsidiary undertaking                          (6,009,828)                     (3,234,439)
Net cash acquired with subsidiary
undertakings                                                        334                       2,182,711
Sale of subsidiary undertaking                                  250,000                               -
Net cash transferred with subsidiary
 undertaking                                                  (231,900)                               -

NET CASH OUTFLOW FROM ACQUISITIONS AND DISPOSALS            (5,991,394)                     (1,051,728)

RESOURCES AND FINANCING                                     (4,599,005)                     (3,153,818)

Decrease / (Increase) in short term
deposits                                                      8,941,457                    (14,995,812)

Issue of ordinary share capital                                 153,136                      15,904,039
Expenses of share issue                                               -                       (855,088)
Redemption of loan stock                                    (3,018,920)                               -
Repayment of short term
borrowings                                                    (693,189)                               -
Capital element of finance lease
payments                                                          (523)                         (6,266)

NET CASH (OUTFLOW)/INFLOW FROM FINANCING                    (3,559,496)                      15,042,685

INCREASE/(DECREASE) IN CASH                                     782,956                     (3,106,945)

                      This information is provided by RNS
            The company news service from the London Stock Exchange