RNS Number:3860S
AIT Group PLC
24 November 2003
24 NOVEMBER 2003
AIT GROUP PLC
("AIT" or "the Company")
Interim Results for 6 months ended 30 September 2003
AIT provides a range of software products which make corporate users more
successful by enabling them to interact more effectively with their customers
and respond to their changing needs.
KEY POINTS:
Financial
* Turnover increased by 19 per cent to #10.0m (2002: #8.4m)
* Pre tax profit of #0.35m before exceptional items (2002: loss #14.75m before
exceptional items)
* After exceptional items, pre-tax profit of #1.0m (2002:pre-tax loss of #37.8m)
* Fully diluted earnings per share of 3.59p (2002: loss per share of 1,556.5p)
* Cash at bank of #4.2m (2002: #5.2m)
Operational
* Maintained strong position in niche Customer Interaction market
* Series of new initiatives to broaden sales channel and develop product,
including new agreement with Fiserv CBS Worldwide
* Growing global network of alliances
* New vertical market - Emergency Services market
* Sales organisation restructured and strengthened
* Positive outlook for second half of financial year and beyond
Nick Randall, Chief Executive of AIT, said today:
"In today's markets, knowing and retaining your customers is an essential part
of staying competitive. Users of our product know that they can respond to their
end customers more efficiently than before. The all round flexibility and
adaptability of our product mean that it can be applied in a growing number of
areas. There are various sales initiatives that are creating a healthy pipeline
of prospects. We are therefore confident of a satisfactory outcome for the
current financial year."
ENQUIRIES:
AIT Group plc Tel. 01491 416600
Nick Randall, Chief Executive Officer
Matthew White, Chief Financial Officer
ICIS Limited Tel. 020 7628 1114
Archie Berens
Caroline Evans-Jones
AIT GROUP PLC
Interim Results for 6 months ended 30 September 2003
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report that in the first six months of its current financial
year, AIT has achieved an increase in sales, has traded profitably and is
recovering from the difficulties it encountered last year. Excellent progress
has been made by the new management team led by Nick Randall, the Chief
Executive. In his statement below, he describes in more detail how this has been
achieved and how this momentum is to be maintained.
Financial Results
In the six months ended 30 September 2003, turnover was #10.0 million (2002:
#8.4 million), representing an increase of 19 per cent on the first six months
of the previous financial year. This increase can be attributed to the
substantial growth in licence sales and related maintenance revenues which
increased 39 per cent to #5.3 million from #3.8 million in the comparable period
last year. Services revenue also performed strongly and improved upon the
comparable period at #4.7 million (2002: #4.6 million).
We are committed to maintaining expenditure on research and development at
sustainable levels to provide focused product enhancements and market specific
offerings. Research and development expenditure in the period was 24% of
turnover.
Pre-tax profit before exceptional items was #0.35 million (2002: loss before
exceptional items #14.75 million). The return to profitability is encouraging
news and reflects the hard work put in by the new management team and by all
staff throughout the Company.
Operating costs (excluding exceptional items) have been reduced from #22.8
million in the corresponding period last year to #9.5 million in the six months
ended 30 September 2003. This supports the statement made in our Annual Report
that we had achieved the objectives of Stage 1 of our turnaround plan by the end
of the last financial year and that we are now trading with a realistic cost
base.
As a result of a property disposal, the Company has benefited from a one-off
exceptional provision release of #180,000. During October 2003 we completed
negotiations with a former associate company and received #500,000 cash in
settlement of their obligations to the Group. As this amount had been fully
provided within investments in the prior financial year, we have written back
#500,000 against the carrying value of this investment as an exceptional gain in
the six months ended 30 September 2003.
Pre-tax profits were #1.0 million for the period (including the aforementioned
exceptional items), compared to a loss before tax of #37.8 million last year.
Fully diluted earnings per share were 3.59p (2002: loss per share of 1,556.5p).
Balance Sheet
During the period, AIT raised #5 million of funding (before costs) through the
issue of convertible loan notes. The convertibility of the loan notes was
approved by shareholders at an Extraordinary General Meeting of the Company on
16 September 2003. All of the convertible loan notes have now been converted
into ordinary shares.
During the period we were also able to convert approximately #0.8 million of the
Company's debt, comprising loans made during 2002 by myself and two former
directors of the Company, into ordinary shares. As referred to in the Annual
Report, we were further able to secure agreement from the Group's bankers to
defer some #1.125 million of scheduled debt repayments. We also rescheduled the
unsecured IMA loan notes on more favourable terms including a significant waiver
of interest. In addition we took the opportunity to reschedule our commitments
under various equipment operating leases with the result that these were
converted into finance leases and capitalised accordingly.
The result of these various arrangements is that the Company's financial
position has been strengthened significantly. We continue to look for ways to
further improve the Company's balance sheet.
Cash Flow
Net cash outflow before financing was #2.7 million (2002: #12.4 million). This
includes #2.3 million outflow arising from a reduction in deferred income in
respect of prepaid support and maintenance and #0.9m cash outflows following a
reduction of creditors and accruals since last year end.
At the end of the interim period, we had #4.2 million of cash at bank and in
hand.
Outlook
I am pleased with the progress made by the new management team in implementing
the recovery plan. Much has already been achieved in a relatively short space of
time, probably more than at one time seemed possible. There still remains a
great deal to be done to attain significantly higher sales and earnings.
However, the commitment and ability of management and staff, together with the
inherent power of AIT's product offering, are good reasons for believing that
this ambition can be fulfilled.
Richard Hicks
Chairman
24 November 2003
AIT GROUP PLC
Interim Results for 6 months ended 30 September 2003
CHIEF EXECUTIVE'S REVIEW
Results
The financial performance of AIT for the six months ended 30 September 2003
reflects the steps taken by the Company's new management team during the last
year to reposition AIT as a leader in the Customer Interaction Management
market. Sales of #10.0 million (2002: #8.4 million) for the period are ahead of
the target we originally set ourselves. This demonstrates that, despite the
earlier problems encountered by the business, AIT's reputation in its
marketplace remains strong.
With the cost base down to a manageable level, the business is now on a more
stable footing. As we stated at our Annual General Meeting, AIT is now modestly
profitable, a significant turnaround compared to the trading position last year.
Although we see this performance as a vindication of the recovery plan devised
last year, we recognise that there remains a considerable amount of work still
to be done. We remain fully committed to this task.
Market Positioning
AIT has now focused its business activities in the Customer Interaction
marketplace. Specifically, our aim is to provide customers with leading edge
software products which enable them to manage their (ever more complex) customer
interactions across multiple contact channels successfully.
The software we provide - the leading edge of which is our flagship product,
Portrait - is easy to use at the point of contact and helps our customers in the
following vital areas:-
- Customer satisfaction and corresponding retention
- Increasing sales
- Reducing costs
- Entering new markets or launching new products
- Being responsive to change
- Compliance
The real heart of our offering is its flexible and easily configurable Rules
Based Business Process Engine. This enables our clients to develop and trial
business processes quickly, in order to drive key initiatives in all six of the
above areas. Portrait is designed to be scalable, with the ability to start off
small, solving a particular problem, or to be rolled out as a full enterprise
solution.
Portrait Reference Sites
We have an outstanding reference site at Nationwide Building Society in the UK,
where Portrait is fully operational across over 12,000 users who are already
experiencing positive business benefits by utilising Portrait across their
multiple channels. In addition we are now operational at Rainier Pacific Bank in
US. Our Japanese partners have configured a Japanese version of Portrait for a
specialised application, and this has been developed in close collaboration with
Ricoh.
New Initiatives
Strategic Partnership with Fiserv
An important initiative is AIT's strategic partnership with Fiserv CBS Worldwide
("Fiserv"), which was formalised last month. Under the terms of this
partnership, Fiserv will adapt and integrate AIT's flagship product, Portrait,
into its end-to-end marketing, sales and servicing solutions for clients in the
financial services industry worldwide. This agreement expands upon a
long-standing relationship with Fiserv which goes back almost 10 years. Fiserv
markets business and technology solutions to financial institutions in more than
50 countries throughout Europe, the Asia-Pacific region, Latin America, the
Caribbean and North America.
Emergency Services - A New Vertical Market
As we reported earlier this year, we have been awarded a new order for Portrait
from the Metropolitan Police for a major emergency and non-emergency contact
handling system. This application is quite separate from our
mainstream Financial Services activities, and is an exciting new area for our
Portrait platform, clearly demonstrating how our innovative concept can work in
other market sectors where client interaction and a Rules Based Process Engine
are vital requirements.
The Metropolitan Police have one of the largest emergency and
non-emergency contact centres in Europe and once this system is fully
operational, we expect to see other opportunities developing in this market,
both domestically and internationally.
Extend & Evolve Edge
Our global base of EDGE call centre customers continues to be an important
source of opportunity. Our Extend & Evolve programme allows EDGE call-centres to
incrementally build on their investment with new capabilities and business
functionality.
Unisys
Our partnership with Unisys has been in existence for some time and we continue
to work closely with them, throughout the world. Unisys is our Global Systems
Integration Partner in the financial services sector. Additionally, more
recently, we have agreed to expand this collaboration into other market areas,
including the Government sector, where Unisys enjoys a strong reputation.
Working closely with Unisys, we have also been awarded an important new order
for Portrait from a Slovenian Bank called Nova KBM. This will provide another
important reference site during the second half of the current financial year.
Other Alliances
A vital part of our effort to further penetrate the exciting Customer
Interaction marketplace is the formation and development of a series of local
alliances with organisations around the world. By working closely with such
organisations, we believe we can increase the overall exposure of our products
to an increasing base of potential customers, across a variety of vertical
industry sectors.
Sales Organisation
Keith Waterman joined the new AIT team in July, with responsibility for
Worldwide Sales and Marketing. Keith has over fifteen years experience in the
software industry, specifically in the Financial Services marketplace, and he
represents an important addition to our new Executive Team. In addition to
taking overall responsibility for Worldwide Sales, Keith will be helping us to
define our new Portrait product initiatives.
Our worldwide sales team working both directly and with our partners has
developed a healthy pipeline of Portrait opportunities.
Outlook
Whilst the general market for software sales remains challenging, we believe
that the Customer Interaction Management market will expand and that we are well
positioned to exploit this opportunity. We therefore remain confident in our
ability to continue the progress made so far.
Nick Randall
Chief Executive
24 November 2003
AIT GROUP PLC
Interim Results for 6 months ended 30 September 2003
CONSOLIDATED PROFIT & LOSS ACCOUNT
6 months to 6 months to Year to
30 September 30 September 31 March
2003 2002 2003
unaudited unaudited audited
Notes #'000 #'000 #'000
Turnover 10,031 8,417 17,584
--------- --------- --------
-----------------------------------------------------------------------------
Operating profit/(loss)
before exceptional items 523 (14,395) (16,669)
Exceptional income/(charges) 1 680 (22,679) (23,520)
-----------------------------------------------------------------------------
Operating profit/(loss) after 1,203 (37,074) (40,189)
exceptional items
Share of losses of associates - (141) (141)
Exceptional loss on disposal of
associate 1 - (382) (382)
Finance charges (173) (212) (515)
--------- --------- --------
Profit/(loss) on ordinary
activities before taxation 1,030 (37,809) (41,227)
Taxation - 77 405
--------- --------- --------
Profit/(loss) on ordinary activities 1,030 (37,732) (40,822)
after taxation
Dividends 2 - - -
--------- --------- --------
Retained profit/(loss) for
the period 1,030 (37,732) (40,822)
--------- --------- --------
Basic earnings/(loss) per
share 3 3.96p (1,556.5)p (306.0)p
--------- --------- --------
Fully diluted earnings/(loss) per
share 3 3.59p (1,556.5)p (306.0)p
--------- --------- --------
AIT GROUP PLC
Interim Results for 6 months ended 30 September 2003
CONSOLIDATED BALANCE SHEET
As restated
As at as at as at
30 September 30 September 31 March
2003 2002 2003
unaudited unaudited audited
Notes #'000 #'000 #'000
Fixed assets
Intangible assets 2,180 2,444 2,297
Tangible fixed assets 1,444 1,409 1,302
Investments 501 3 1
---------- ---------- ---------
4,125 3,856 3,600
Current assets
Debtors 2,910 2,686 4,114
Cash receivable
from rights issue - 3,604 -
Cash at bank and in hand 4,209 5,243 2,735
---------- ---------- ---------
7,119 11,533 6,849
Current liabilities
Creditors: amounts
falling due within
one year 5 (2,636) (5,632) (4,220)
---------- ---------- ---------
Net current assets 4,483 5,901 2,629
---------- ---------- ---------
Total assets less
current liabilities 8,608 9,757 6,229
Creditors: amounts
falling due after
more than one year 5 (8,021) (9,132) (7,851)
Provisions for
liabilities and
charges (5,229) (6,195) (6,853)
Accruals and
deferred income 6 (7,488) (10,494) (10,364)
---------- ---------- ---------
Net assets/(liabilities) (12,130) (16,064) (18,839)
---------- ---------- ---------
Capital and reserves
Called up share capital 3,182 2,656 2,655
Share premium 24,967 19,592 20,042
Other reserves 563 470 336
Merger reserve (1,162) (1,162) (1,162)
Profit and loss account (39,680) (37,620) (40,710)
---------- ---------- ---------
Shareholders'funds/(deficit) (12,130) (16,064) (18,839)
---------- ---------- ---------
AIT GROUP PLC
Interim Results for 6 months ended 30 September 2003
CONSOLIDATED CASHFLOW STATEMENT
6 months 6 months Year to
to to
30 30 31/3/03
September September
2003 2002 2003
unaudited unaudited audited
Notes #'000 #'000 #'000
NET CASH OUTFLOW FROM 8 (2,867) (12,523) (16,766)
OPERATING ACTIVITIES
Returns on investments and servicing
of finance
Net interest paid (107) (212) (515)
Taxation
Corporation tax received 250 1,076 1,077
Capital expenditure
Net payments to acquire tangible
fixed assets - (87) (75)
Proceeds from the sale of tangible
fixed assets - 25 59
--------- --------- --------
- (62) (16)
Acquisitions
Investments in associated
undertakings - (700) (710)
Proceeds from the sale of
investments - 9 10
--------- --------- --------
- (691) (700)
--------- --------- --------
CASH OUTFLOW BEFORE FINANCING (2,724) (12,412) (16,920)
Financing
Issue of new shares (net of expenses) - 14,760 18,310
Repayment of bank loan - (2,000) (2,000)
Loans received from director and
former directors - 753 754
Repayment of loan note - - (1,518)
Issue of convertible loan note (net
of expenses) 4,656 - -
Finance lease payments (458) (40) (73)
--------- --------- --------
Net cash inflow from financing 4,198 13,473 15,473
--------- --------- --------
INCREASE / (DECREASE) IN CASH 1,474 1,061 (1,447)
IN THE PERIOD
--------- --------- --------
AIT GROUP PLC
Interim Results for 6 months ended 30 September 2003
NOTES TO THE FINANCIAL STATEMENTS
1. Profit/(loss) on ordinary activities before taxation is stated after
the exceptional (income)/charges shown below:
6 months to 6 months to Year to
30 September 30 September 31 March
2003 2002 2003
unaudited unaudited audited
#'000 #'000 #'000
Write down of purchased goodwill - 10,434 10,434
Write downs and losses relating to
investments and associates - 2,682 2,705
Write back of provision against loan
due from former associate (500) - -
Restructuring and reorganisation
costs - 4,862 5,376
Onerous leases and other commercial
liabilities (180) 4,701 5,005
---------- --------- --------
(680) 22,679 23,520
Loss on disposal of associate - 382 382
---------- --------- --------
(680) 23,061 23,902
---------- --------- --------
2. No interim dividend is payable for the period.
3. Basic earnings per share of 3.96p (2002: loss per share 1,556.5p) is
based on the profit after tax of #1,030,000 (2002: loss #37,732,000) and on a
weighted average of 26,038,307 (2002: 2,424,196) shares. Fully diluted earnings
per share of 3.59p (2002: loss per share 1,556.5p) is based on the basic EPS
earnings above with a weighted average of 28,685,220 (2002: 2,424,196) shares.
4. The results of the year ended 31 March 2003 are extracts from the
published financial statements as filed with the Registrar of Companies. These
were audited and reported on without qualification by Deloitte and Touche.
5. The Balance Sheet as at 30 September 2002 has been restated to reflect
a reclassification of accruals and deferred income adopted by the Group during
financial year ended 31 March 2003. At 30 September 2002, accruals of #4,585,000
and deferred income of #5,123,000 were previously included within creditors due
within one year, and deferred income of #786,000 was previously included within
creditors due after more than one year.
6. Accruals and Deferred Income
As at As at As at
30 September 2003 30 September 2002 31 March 2003
unaudited unaudited audited
#'000 #'000 #'000
Accruals 2,156 4,585 2,640
Deferred income
falling due within one year 5,027 5,123 7,218
---------- --------- --------
7,183 9,708 9,858
Deferred income
falling due after one year 305 786 506
---------- --------- --------
7,488 10,494 10,364
---------- --------- --------
7. Statement of Total Recognised Gains and Losses
6 months to 6 months to Year to
30 September 30 September 31 March
2003 2002 2003
unaudited unaudited audited
#'000 #'000 #'000
Profit / (loss) for the financial
period 1,030 (37,732) (40,822)
Exchange translation differences 227 227 261
---------- --------- --------
Total recognised gains and losses in
the period 1,257 (37,505) (40,561)
---------- --------- --------
8. Reconciliation of operating profit / (loss) to net cash outflow from
operating activities
6 months to 6 months to Year to
30 September 30 September 31 March
2003 2002 2003
unaudited unaudited audited
#'000 #'000 #'000
Operating profit / (loss) 1,203 (37,074) (40,189)
Depreciation 189 614 685
Amortisation/ Impairment of goodwill 117 10,679 10,825
Loss / (profit) on sale of fixed
assets 8 - (6)
Write down on associate investments - 2,156 2,156
Write back on loan due from former
associate (500) - -
Provision against own shares - 526 528
Decrease in debtors 953 5,971 4,874
(Decrease) / increase in creditors,
accruals and deferred income (3,308) 1,291 286
(Decrease) / increase in provisions (1,625) 3,315 4,044
Other movements 96 (1) 31
---------- --------- --------
Net cash outflow from operating
activities (2,867) (12,523) (16,766)
---------- --------- --------
9. Analysis of movement in net debt
Equipment At 30
At Cash leases Interest Equity Foreign September
1 April 2003 flow capitalised role up Conversion exchange 2003
#'000 #'000 #'000 #'000 #'000 #'000 #'000
Cash at bank
and in hand 2,735 1,474 - - - - 4,209
Bank term loan (6,000) - - - - - (6,000)
IMA Loan Notes (2,222) - - - - 131 (2,091)
Convertible
Loan Notes - (4,656) - - 4,656 - -
Finance Leases - 458 (1,270) (24) - - (836)
Director's and
former directors'
loans (754) - - (42) 796 - -
------ ------ ------- ------ ------- ------- -------
Net debt (6,241) (2,724) (1,270) (66) 5,452 131 (4,718)
------ ------ ------- ------ ------- ------- -------
10. The interim report will be posted to shareholders on 1st December 2003 and
copies are available from the Group's head office at The Smith Centre, Fairmile,
Henley-on-Thames, RG9 6AB
11. The financial information contained in this statement does not constitute
statutory accounts within the meaning of section 240 of the Companies Act 1985,
and has not been audited or reviewed. The unaudited accounts for the half years
ended 30 September 2003 and 30 September 2002 have been prepared on a basis
consistent with the statutory accounts for the year ended 31 March 2003. These
statutory accounts received an unqualified auditor's report and have been filed
with the Registrar of Companies.
12. The interim report was approved by the Board of Directors on 21 November
2003.
This information is provided by RNS
The company news service from the London Stock Exchange
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