Interim Results for 7 Months
RTS NetWorks Group PLC
5 October 2000
RTS NETWORKS GROUP PLC
Interim Results for the Seven months ended 30 June 2000
RTS Networks Group, the specialist provider of internet
solutions, encompassing internet, intranet, extranet and
wireless technologies, which floated on AIM in December 1999,
announces Interim Results for the seven months to 30 June
2000.
Highlights
* The period was dedicated to laying the foundations
for enhanced future revenue. In particular, the Group:
* integrated the founder companies and those acquired
during the period
* built the appropriate technical, financial and
administrative infrastructure for an expanding
international company
* established and equipped offices in Finland, France,
UK and US
* continued R&D in the areas of wireless, content
management and e- and m- business
* created an extensive range of WAP products and
solutions
* widened the client base and developed strategic
partnerships.
* The Group achieved sales growth of 45% in Q2 on Q1,
with a similar level of growth in Q3
* The Group's growing client list includes Astra
Zeneca, Boeing, Colt Telecom, France Telecom, Granada,
Motorola, Nokia Networks, Reuters, Sony, Tesco,
Total/Fina/Elf, and the US National Guard
* In line with expectations, turnover for the period
was £2.48 million, with expenditure resulting in a net
loss before goodwill amortisation of £4.29 million
David Ward-Perkins, Chairman, commented:
'Third quarter sales have shown a 40 per cent increase over the
previous quarter with per employee revenues increasing by 30
per cent. The third quarter should show a lower level of
investment in development activity, with a further
significant improvement in trading.
'Our expectation is that sales and revenues per employee will
continue to grow significantly in the fourth quarter, with
an increase in the size of projects and number of clients.
'The Directors believe that the integration of the various
constituent companies in the Group has largely been achieved
and that we are on track to achieve a significant
improvement in underlying trading performance during 2001,
as planned, while maintaining our lead in key technical
areas. The Directors are confident that the Group is well
placed to take advantage of the potential of the m- and e-
business market. '
For further information please contact:
RTS Networks Group PLC 020 7749 5000
David Ward-Perkins, Chairman
Tony Harrison, Group Managing Director
Square Mile Communications 020 7601 1000
Nick Oborne/Georgina Briscoe
Thursday 5 October 2000
RTS NETWORKS GROUP PLC
Interim Results for the Seven months ended 30 June 2000
Summary
During the period the Group successfully integrated ten Internet
and wireless solutions companies, growing from a staff of 130
in December 1999 to over 260 at present. Supported by a
strong component and solution offering we have shown fast
growth in Finland, France, the UK and the United States.
Our first seven months as a quoted company were primarily
dedicated to:
* integrating the founder companies and those acquired
during the period;
* building the appropriate technical, financial and
administrative infrastructure for an expanding
international company;
* establishing and equipping new offices in all
countries of operation;
* research and development in the areas of wireless,
content management and e- and m-business;
* creating an extensive range of wireless application
protocol (WAP) products and solutions; and
* widening our blue chip client base and developing
strategic partnerships.
These initiatives have laid the foundations for enhanced future
revenue. We achieved sales growth of 45 per cent between
quarters one and two, with third quarter revenues increasing
at similar rates. Future expansion will be both organic and
through further acquisitions.
The m- and e- business markets
The services market for mobile handheld devices is forecast to be
an $86 billion industry by the end of 2000 in Europe alone,
and is expected to grow further with the introduction of GPRS
and other broadband technologies (IDC Research). The Group's
solutions enable companies to extend their business beyond
the web and gain a competitive advantage through these
technologies.
The mobile Internet creates a challenge for businesses, requiring
them to manage increasingly complex information and services
across multiple channels, including PCs, mobile telephones
and other Internet terminals. The Group offers solutions
for both the management of transactions and content and is
therefore well placed to provide clients with complete and
usable applications.
These areas have high growth potential with the market for
content management alone estimated to be worth £10 billion by
2004 (Meta Group). As a technological forerunner in its
field the Group is well positioned to benefit from these
rapidly expanding markets.
Financial Review
Turnover for the seven months ended 30 June 2000 was £2.48
million, with expenditure of £6.77 million resulting in a net
loss before goodwill amortisation of £4.29 million for the
period.
Following admission to trading on AIM in December 1999, the Group
continued its programme of investment for future growth in
line with the objectives set out at that time. The Directors
believe we have established an integrated global business
with a coordinated reporting structure, addressing finance,
sales and resource management. This enables the Group to use
and sell the products and services of all Group companies on
an international basis.
To achieve this level of integration, over £1 million was
invested in:
* marketing, including creation and launch in February
of the RTSe brand across all Group companies, and the
website;
* research and development;
* recruitment of executive staff and skilled
employees; and
* professional and consultancy fees on trading
activities.
Over £0.75 million was invested in the Group's infrastructure,
including networks, communication, a multi-site intranet, and
new premises in all countries. A further £1.3 million in
professional fees was also incurred with the cost of
Admission to AIM and acquisitions during the period.
Integration
During the period, ten companies were effectively merged into
four trading companies, one in each country. Local
operations are overseen by Group management, based in London,
headed by Managing Director Tony Harrison who was appointed
in April 2000.
Other events in the period include the strengthening of the UK
operation, with the acquisition and integration of Boxer IT
in April, and the opening of additional offices in Paris,
France and Pori, Finland.
Solutions and components
Solutions, components and products developed during the period
include:
* intelligent wireless solutions, integrated with
'traditional' web applications;
* e- & m-commerce applications, from interface design
to fulfilment and delivery;
* management of text, image and sound, from multiple
platforms, across multiple devices;
* the RTSe wireless suite: Outlook Bridge, Route WAP,
Wireless Investor and Wireless Timetable;
* e- and m-finance applications, packaged under the
Investor Framework umbrella;
* a portfolio of tested, delivered applications for
the retail and corporate intranet markets; and
* content management components, including XML Editor
and @Doc.
Outlook
In July 2000 the Group made two further acquisitions and raised
£2.72 million in cash through a placing:
* Synchronicity, Inc., brought strategic content
management skills to the Group, including the
Synchronicity Content Management component, and doubled
our staff number in Seattle, USA; and
* Axida Limited, a UK based e-logistics company
reinforced our e-commerce capacity, notably through HDi
(home delivery) and Instore (EPOS). Axida's operations
will be progressively integrated into RTSe UK.
Since acquisition both have traded in line with expectations.
In addition, a joint venture was formed with MDC Education Group
Oy in Finland to develop virtual learning environments.
Third quarter sales have shown a 40 per cent increase over the
previous quarter with per employee revenues increasing by 30
per cent. The third quarter should show a lower level of
investment in development activity, with a further
significant improvement in trading.
Our expectation is that sales and revenues per employee will
continue to grow significantly in the fourth quarter, with an
increase in the size of projects and number of clients.
Our rapidly growing blue chip client base now includes: Amadeus,
AstraZeneca, Boeing, Colt Telecom, Danisco, Evli, France
Telecom, Helsinki City, Granada, Merck Sharpe & Dohme,
Motorola, Nissan, Nokia Networks, Reuters, Sony, Tesco,
Total/Fina/Elf and the U.S. National Guard.
The Directors believe that the integration of the various
constituent companies in the Group has largely been achieved
and that we are on track to achieve a significant improvement
in underlying trading performance during 2001, as planned,
while maintaining our lead in key technical areas. The
Directors are confident that the Group is well placed to take
advantage of the potential of the m- and e-business market.
David Ward-Perkins
Executive Chairman 5 October 2000
For further information please contact:
RTS Networks Group PLC 020 7749 5000
David Ward-Perkins, Chairman
Tony Harrison, Group Managing Director
Square Mile Communications 020 7601 1000
Nick Oborne/Georgina Briscoe
RTS Networks Plc
Summary Consolidated Interim Results
for the seven months ended 30 June 2000
Seven months ended 30 June 2000
------------------------------------
Before Goodwill
goodwill amortisation Total
Notes £000's £000's £000's
Turnover 2,479 - 2,479
----------------------------------
Operating loss (4,387) (688) (5,075)
Net interest receivable 94 - 94
----------------------------------
Loss before taxation (4,293) (688) (4,981)
Taxation - - -
----------------------------------
Retained loss for the period (4,293) (688) (4,981)
==================================
Loss per share (p) 3 (5.37) (0.86) (6.23)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Statement of Total Recognised Gains and Losses
for the seven months ended 30 June 2000
Notes £000's
Loss for the period (4,981)
Currency translation (41)
------------
5 (5,022)
============
RTS Networks Plc
Consolidated Balance Sheet
As at 30 June 2000
Notes £000's
Fixed assets
Intangible assets 9,795
Tangible assets 1,156
------------
10,951
Current assets
Debtors due within one year 1,435
Cash on hand 1,913
------------
3,348
Creditors: amounts falling
due within one year (1,140)
------------
Net current assets 2,208
------------
Total assets less current liabilities 13,159
Creditors: amounts falling due after
more than one year (94)
------------
13,065
============
Shareholders' funds
Called up share capital 4 802
Share premium and other reserves 5 17,285
Profit and loss account 5 (5,022)
------------
13,065
============
RTS Networks Plc
Summary Consolidated Cashflow
For the seven months ended 30 June 2000
£000's
Cash outflow from operating activities (4,323)
Returns on investment and servicing of finance 94
Capital expenditure and financial investment (761)
Acquisitions (889)
------------
Net cash flow before financing (5,879)
Financing 7,792
------------
Increase in cash in the period 1,913
============
RTS Networks Plc
Notes to the Financial Information
For the seven months ended 30 June 2000
1. The interim financial information has been prepared in accordance with
applicable accounting standards. The financial information was approved by
a duly appointed and authorised committee of the Board of Directors on 4
October 2000.
2. The Group financial information consolidate the accounts of the Company
and each of its subsidiary undertakings. Subsidiary undertakings are
accounted for from the effective date of acquisition. Intercompany
sales are eliminated on consolidation so that the Group financial
information relates to external transactions only.
3. Loss per share has been calculated on the average weighted number of shares
in issue during the period of 79,984,967.
4. Share capital No. £000's
Authorised ordinary shares of 1p each 100,000,000 1,000
Alloted, called up and fully paid ordinary
shares of 1p each 80,178,125 802
5.Shareholders' funds
Share
premium
Share & other Profit
capital reserves and loss Total
£000's £000's £000's £000's
Shares issued in the period 802 17,993 - 18,795
Share issue costs - (708) - (708)
Loss for the period - - (5,022) (5,022)
At 30 June 2000 802 17,285 (5,022) 13,065
6. Acquisitions made during the period
The company completed the acquisitions of Acces SARL in France and Boxer IT
Limited in the UK on 31 January 2000 and 4 April 2000 respectively.The post
acquisition results and cash flows of these businesses are not material to
the financialinformation above. Therefore,there is no segregation of the
financial information regarding these acquisitions.
7. Events subsequent to the balance sheet date
On 10 July 2000, the company acquired Synchronicity Inc, a Seattle based
web development company specialising in content management, interactive
portals and web based e-commerce applications,for a consideration of up to
£4.25m, of which £3.25m was paid in shares and a further £1.0m contingent
upon performance.
On 10 July 2000, the company acquired Axida Limited, a UK based e-logistics
company specialising in retail fulfilment software for a consideration of
up to £6.175m, of which £3.6m was paid in shares,£1.575m in cash and a
further £1.0m contingent upon performance.
On 10 July 2000, the company placed a total of£4,650,000 ordinary shares
at 100p per share to raise £2,725,000 in working capital and £1,925,000 to
fund the acquisitions listed above.
8. The financial information set out in this document does not constitute
financial statements within the meaning of section 240 of the Companies Act
1985.
The company was incorporated on 8 September 1999 and accordingly the
company has not yet filed any accounts with the Registrar of Companies.
9. Copies of the interim accounts will be posted to all shareholders and will
be available for inspection at the Company's registered address.
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