Audited 9 Months Results
Auxinet PLC
30 June 2000
auxinet plc
Chairman's Statement
For those investors in the formerly named Corporate Executive Search
International plc, 1999 saw the departure of the then Chief Executive in
August and the former Chairman in November. Jane Reedy became Managing
Director of the recruitment activity in August and I became Chairman in
November. These changes led the reshaped Board to focus on utilising the
intellectual capital existing within the Group to explore opportunities within
and outside our core technology recruitment business. These explorations led
to the announcement in 1999 of the intention to acquire DataCash Limited, the
creation of our on-line recruitment business, boldly-go.com, and an
alternative recruitment offering, rocketscience.
The results reported here, that do not include the DataCash business or
revenues from the two new recruitment businesses, show a rather disappointing
end to 1999 in recruitment activity. This was however not unexpected as the
predicted downturn in hiring leading up to the new millennium affected
performance and costs were impacted by the development of boldly-go.com and
rocketscience. Turnover for the shortened 9 month period was £1.6 million with
an operating loss before exceptional items of £61,000. The results for the
period have also been impacted, subsequent to the year-end, by the provision
for NIC on the potential exercise of share options, an increasing problem
being experienced by technology, and in particular internet, companies. The
exceptional items of £163,000 include a provision for NIC of £133,000. Whether
this NIC charge will eventually be incurred is far from certain as the
Government is still to respond to criticisms on this issue. However in light
of recent accounting directives it has been necessary to make such a
provision. As a result the pre-tax loss for the period has increased to
£231,000.
It is encouraging to report that the poor sales performance of CorpExec in the
final quarter of 1999 has been followed by a strong increase in activity in
2000 as our new consultants have established themselves. CorpExec has won some
exciting search mandates from our blue chip Telco and IT clients as well as
from the numerous rapidly developing internet companies. Following an
awareness campaign designed to establish relationships with the US venture
capital community, CorpExec has been selected as a search partner by a number
of dotcom companies reaching across to Europe from the US. It is hoped that
the further development of these relationships will impact the CorpExec
business significantly. boldly-go.com, launched in March, has had a very
encouraging start, having already been successful in securing business in its
target start-up and pre-IPO market. Further comments on the resurgence of the
recruitment activities are contained in the Operating Review in the Annual
Report and Accounts.
The major change in the structure of the Group came through the acquisition of
DataCash, a leading Payments Solutions Provider (PSP) in the UK. The timing
of this acquisition, and the attendant fund-raising of £6.5 million, net of
expenses, to finance the expansion and development of the business was
excellent, both in terms of the accelerating demand for the products and
services that DataCash provides, and for raising finance from institutional
investors.
DataCash provides authentication, fraud screening and payment settlement
services for debit and credit card transactions over internet protocol (IP).
IP is increasingly being used as the 'messaging system of choice' not only
over the internet, but also by call-centres new technologies like WAP
telephony and WebTV, and even in the high street. DataCash supports
transaction activity from all these sources. DataCash has grown its merchant
base almost 30% in the first quarter of 2000 and in the same period
transaction levels have grown even faster, growing at 35% compound per month.
The integration of DataCash within the newly named holding company, auxinet
plc, has provided the resources and structure to support this rapid growth.
Utilising the recruitment skills of CorpExec, DataCash has grown from 8
employees in October 1999 to almost 40 employees today, including a technical
development team of 22 based in Edinburgh. As a result of these aggressive
hiring plans we have been able to develop the core payment gateway software
further so that it can currently process up to 128 transactions
simultaneously. Further development in hand will expand this capability and
enhance the software to include other payment and value added functionality.
DataCash is integrated into a number of reseller packages, whereby DataCash is
the default payments solution for their own brand offering. This is expected
to generate further significant growth, and is a model that we are confident
can be used as we push into other territories. We already have clients in
mainland Europe and are exploring a number of other opportunities. (Although
not strictly required, as the business came into the Group after the period
under review in these accounts, a more detailed description of the DataCash
activities, and its development since joining the Group, is also contained in
the Operating Review in the Annual Report and Accounts.
It is anticipated that DataCash will show very rapid growth as e-commerce
activity becomes increasingly integral to purchasing decisions, both in the
consumer and the business markets. The common requirement of all e-commerce
activity is a means by which to exchange payment between the buyers and the
sellers and DataCash is, in a sense, part of the stick that is at the centre
of the rocket of e-commerce. The Board is confident that the higher and
further that rocket soars, the greater will be the rewards for DataCash.
The auxinet Group as a whole is developing into, what is increasingly known in
the US as an EcoNet. An EcoNet can be likened to a wheel and hub, with auxinet
acting as the centre bringing benefits and opportunities to the companies that
it supports on the wheel. By encouraging our client companies, be they
interested in e-commerce and/or executive search, to work in partnership both
with us and with other client organisations, we believe that there can be
significant mutual benefit to the entire community. As part of this programme
we have, through auxinet Investments Limited, taken our first minority stake
in a synergistic business. We believe that by developing this portfolio
further, along with the boldly-go.com revenue model that selectively takes
equity stakes in lieu of fees, we will add significant value to our
shareholders in the future.
The Company's cash balance remains strong. Cash burn has been as expected as
the Company invested heavily during the early part of 2000. At the end of May
the Company had cash resources of £6.2 million.
This has been a year of great change for our employees, many of whom have only
recently joined us. We will only be successful as a company as a result of
their commitment, and I would like to take this opportunity to thank them for
their efforts.
The Board views the future with great confidence, and with great excitement,
given the challenges and choices that we face. We look forward to reporting on
developments as the year progresses.
David Bailey
Chairman
Consolidated Profit and Loss Account
For the period ended 31 December 1999
9 months ended 12 months ended
31 December 1999 31 March 1999
£'000 £'000
Turnover 1,615 2,725
Administrative expenses
- Exceptional items
Provision for national insurance on
share option gains (133) -
Severance payments (note 2) (92) (151)
Share scheme credit (note 2) 62 -
- Other (1,676) (2,600)
Total administrative expenses (1,839) (2,751)
Operating (loss)/profit before
exceptional items (61) 125
Exceptional items (163) (151)
Operating loss (224) (26)
Net interest payable and (7) (19)
similar charges
Loss on ordinary activities (231) (45)
before taxation
Tax on loss on ordinary activities - 4
Loss on ordinary activities (231) (41)
after taxation
Dividends - -
Retained loss for the period (231) (41)
Basic earnings per share (0.15)p (0.03)p
Basic earnings per share (0.07)p 0.05 p
before exceptional items
All amounts relate to continuing activities.
There are no recognised gains or losses other than those shown in the profit
and loss account.
There are no differences between historical cost profits and losses and those
shown above.
Consolidated Balance Sheet
As at 31 December 1999
9 months ended 12 months ended
31 December 1999 31 March 1999
£'000 £'000
Fixed assets
Tangible assets 157 251
Current assets
Debtors 727 712
Cash at bank and in hand 521 531
1,248 1,243
Creditors
Amounts falling due within one year (615) (557)
Net current assets 633 686
Total assets less current liabilities 790 937
Creditors
Amounts falling due after more than one year (95) (147)
Provisions for liabilities and charges (133) -
Net assets 562 790
Capital and reserves
Called up share capital 159 156
Share premium account 748 686
Share scheme reserve 21 100
Merger reserve (124) (124)
Profit and loss account (242) (28)
Equity shareholders funds 562 790
Consolidated cash flow statement
For the period ended 31 December 1999
9 months ended 12 months ended
31 December 1999 31 March 1999
£'000 £'000
Net cash (outflow)/inflow from
operating activities (15) 542
Returns on investments and servicing of finance
Interest received 14 12
Overdraft interest and similar charges (4) -
Interest element of finance lease rental payments (17) (31)
Net cash outflow from returns on investments
and servicing of finance (7) (19)
Taxation
Corporation tax paid (including ACT) - (35)
Tax paid - (35)
Capital expenditure
Purchase of tangible fixed assets (16) (34)
Sale of tangible fixed assets 8 34
Net cash outflow from capital expenditure (8) -
Net cash (outflow)/inflow before management
of liquid resources and financing (30) 488
Management of liquid resources
Increase in short term bank deposits (250) -
Net cash outflow from management of liquid
resources (250) -
Financing
Capital element of finance lease
rental payments (45) (54)
Issue of ordinary share capital 3 -
Premium on issue of ordinary share capital 62 -
Net cash inflow/(outflow) from financing 20 (54)
(Decrease)/increase in cash in the period (260) 434
Notes to the Financial Statements
For the period ended 31 December 1999
1. The financial information contained in this report does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985
(as amended). The results for the year ended 31 March 1999 and the period
ended 31 December 1999 were reported on by the auditors and received an
unqualified report and contained no statement under Section 237(2) or (3) of
the Companies Act 1985 (as amended). Full accounts for the year ended 31 March
1999 have been delivered to the Registrar of Companies and for the period
ended 31 December 1999 will be filed in due course.
2. The exceptional items in the period ended 31 December 1999 relate to a
charge of £92,000 representing notice period payments made to Roger Evans, the
Company's Chief Executive and Alan Bates, the Company's Non-Executive
Chairman. A credit of £62,000 was released to the profit and loss account on
the expiry of share options held by Alan Bates (£54,000) and other former
employees (£8,000)
The exceptional items in the year ended 31 March 1999 relate to a charge of
£137,000 representing notice period payments made to Mark Shields, the
Company's Non-Executive Director and former Chief Executive, and Mark Brooke,
the Company's Director of International Business Development, in accordance
with their executive service contracts. These payments were a contractual
liability of the Company.
A further charge of £14,000 represents termination payments made to employees
of the Company's training and development division that was discontinued
during 1999.
3. The earnings figure for basic earnings per share is based on the loss on
ordinary activities after tax of £231,000 (March 1999: profit £41,000). The
weighted average number of ordinary shares outstanding during the period used
in the calculation of Basic Earnings Per Share was 156,210,473 (March 1999:
156,002,000)
No figure for diluted earnings per share has been presented because all
potential ordinary shares are treated as antidilutive.
9 months ended 12 months ended
31 December 1999 31 March 1999
£'000 £'000
Earnings per Share Before Exceptional
Items
Loss on ordinary activities after taxation (231) (41)
Exceptional items (including tax adjustment) 129 119
(Loss)/profit on ordinary activities before
exceptional items (102) 78
Weighted average number of ordinary shares 156,210,473 156,002,000
The directors believe that earnings per share before exceptional items
represents a more appropriate measure of the Group's underlying performance,
and will allow more meaningful comparisons in the future.
4. Reconciliation of Operating Loss to Operating Cash Flows.
9 months ended 12 months ended
31 December 1999 31 March 1999
£'000 £'000
Operating loss (224) (26)
Exceptional charges within operating loss 163 151
Operating (loss)/profit before exceptional
charges (61) 125
Depreciation 103 148
Profit on disposal of fixed assets (1) (14)
(Increase)/decrease in debtors (15) 660
Increase/(decrease) in creditors 51 (245)
Share scheme charge - 19
Outflow relating to exceptional items (92) (151)
Net cash (outflow)/inflow from operating
activities (15) 542
5. A statement covering the Group's year 2000 compliance programme is included
in the Annual Report and Accounts.
6. Following an extraordinary general meeting held on 22 March 2000 the
Company acquired 100% of the issued share capital of DataCash Limited,
consideration for the acquisition being satisfied by the issue of 158,732,000
consideration shares at 6p per share.
On the same date the Company raised approx £6.5 million, net of expenses, by
way of a placing of 60,000,000 subscription shares at 12p per share, and Gavin
Breeze agreed to sell 16,000,000 of the consideration shares also at 12p per
share.
On the same date employees holding options under the DataCash share option
scheme exchanged such options for an equivalent number of share options under
the auxinet share option scheme.
On 24 March 2000 Gavin Breeze was appointed to the Board.
The Company changed its name from Corporate Executive Search International plc
to auxinet plc.
7. Copies of the Annual Report and Accounts for the year ended 31 December
1999 will be mailed to shareholders and will be available free of charge from
the Company's head office at 7 Savoy Court, Strand, London, WC2R 0EZ for a
period of 14 days from 3 July 2000.
Latest directors dealings
- 3 hours ago Oxford Nanopore Technologies
- 4 hours ago AVI Global Trust
- 4 hours ago LSL Property Services
- 4 hours ago Bluebird Merchant Ventures (DI)
- 4 hours ago Power Probe PLC