RNS No 6861h
INTERNET TECHNOLOGY GROUP PLC
10th June 1998
INTERNET TECHNOLOGY GROUP PLC
("ITG")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 1998
Internet Technology Group plc ("ITG"), through its subsidiaries,
Global Internet and GX Networks, is the UK's largest independent
Internet Service Provider ("ISP").
* Subscriber numbers increased to 80,000 (as at 30 April 1997 -
26,000)
* Turnover up to #4.3 million (1997 - #1.1 million)
* Loss before tax, after exceptional item, reduced to #164,000
(1997 - loss of #1.18 million)
* Loss per ordinary share of 0.42p (1997 - loss of 4.22p)
* Significant investment in infrastructure progressing
* GlobalWave joint venture proceeding ahead of plan, in light
of significant progress by Wave Systems in terms of hardware
deals
Laurence Blackall, Chief Executive of ITG, said:
"We have, once more, been the net beneficiaries of a further six
months' substantial growth in our core ISP business. That growth
apart, our GlobalWave joint venture is now well-positioned to
begin to benefit from the adoption of the WaveMeter technology by
some of the best known hardware manufacturers in the world."
10 June 1998
Enquiries:
Internet Technology Group plc Tel: 0181 957 1180
Laurence Blackall Email: lb@itg.net.uk
Richard Brocksom Email: rb@itg.net.uk
College Hill Tel: 0171 457 2020
Nicola Weiner Email: nicola@collegehill.co.uk
Archie Berens Email: archie@collegehill.co.uk
INTERNET TECHNOLOGY GROUP PLC
("ITG")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 1998
CHAIRMAN'S STATEMENT
Introduction
I am very pleased to report that ITG's results for the first half
of the current financial year are very much in line with
expectations. Strong growth in both of our operating subsidiaries
has been sustained throughout the first half of the year and is
set to continue. Having steadily consolidated our position over
the last eighteen months, it is with considerable pleasure that
ITG reports these results as the leading independent Internet
Service Provider in the UK.
Results
In the six months ended 30 April 1998, ITG significantly increased
its turnover from #1.1 million to #4.3 million. The loss before
taxation was #164,000, compared with a loss of #1.18 million in
the equivalent period last year. The results reflect the disposal
of our shareholding in Xaar plc; without this exceptional item,
the loss before tax would have been #1.15 million, in line with
our forecasts.
The subscriber base continued to grow strongly, in both the
business and consumer markets. We still believe that it is vital
for the long-term future of the business to continue to invest in
infrastructure and marketing without which we will not achieve the
critical mass necessary to achieve long-term growth.
Cash Flow
As I have previously stated, the Group is cash generative and its
overall cash position, both at the end of April, and subsequent to
our final payment to Wave Systems, is strong. Our budgeted cash
requirements for the remainder of the year, which includes the
payment of US$3.25 million to Wave Systems, fall comfortably
within the resources currently available to ITG.
Operations
At the time of writing, Global Internet has over 80,000
subscribers, which is slightly ahead of our budgeted number. This
has been achieved without any attrition to our pricing, which has
remained unchanged since September 1995. GX Networks, which has
now been part of ITG for a full 12 months, also performed in line
with expectations. With a considerably expanded sales team, we
remain confident of further growth in the second half of the
current financial year and beyond.
Infrastructure
Since March 1998, the Company has been investing heavily in
upgrading its infrastructure and this process will be completed in
a few weeks time with the opening of our new call centre. Our 155
Mbit transatlantic bandwidth and our new Cisco platform provide
us with the capacity to accelerate our growth, while our new call
centre gives us the capacity to re-house and expand our widely
acclaimed Technical Support and Customer Service operations. In
that area, a new call management system is delivering significant
operational efficiencies, which will help us to manage our growth.
GlobalWave
Until today, I have not enlarged on the terms of the Group's joint
venture with Wave Systems Corporation ("Wave"). Our shareholders
have been very well protected from any risks associated with this
venture in an agreement that only allowed for payment of the full
licence fee on the achievement of specific milestones. One of
these was the December 1997 announcement from IBM, a very
important endorsement and validation of Wave's technology. Wave's
recent announcement of the agreement with Standard Microsystems
was not only the final milestone, but also the coming of age of
the venture, facilitating as it does a low cost solution to the
wide-scale deployment of WaveMeters in personal computers. Wave
has already signed distribution agreements with a number of
leading content providers in preparation for high volumes of Wave-
equipped computers being delivered into the market in 1999. I am
extremely encouraged by the prospects for this new venture and the
resulting benefits that should accrue to ITG.
Prospects
With the continued growth in our subscriber base, there is no
doubt that we are justifying our earlier confidence in our ability
to grow the business. We still believe that there is ample scope
for this rate of growth to increase, as the use of the Internet is
becoming an everyday part of the lives of businesses and
consumers. As the leading independent ISP, we are ideally placed
to capitalise on this phenomenon and we are confident that our
strategy of investment in infrastructure and marketing will soon
begin to result in a tangible return for our shareholders. That
is before we even consider the potential of our GlobalWave joint
venture, whose technology is now beginning to receive encouraging
endorsements from major players in the technology industry.
We are therefore confident of our ability to take the business
forward from the solid platform which we have already built and to
exploit the opportunities that will undoubtedly present themselves
to us.
Jan Murray
Chairman
10 June 1998
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR SIX MONTHS ENDED 30 APRIL 1998
6 months 6 months to 12 months to
to 30 April 31 October
30 April 1997 1997
Notes 1998 Unaudited Audited
Unaudited #'000 #'000
#'000
TURNOVER
Continuing 2 i) 4,281 1,077 3,829
operations
Discontinued 2 i) 5 61 145
operations
4,286 1,138 3,974
Cost of sales (1,975) (379) (1,461)
GROSS PROFIT 2,311 759 2,513
Selling and (1,487) (653) (2,085)
distribution
expenses
Administrative (1,971) (1,196) (2,410)
expenses
OPERATING LOSS (1,147) (1,090) (1,982)
Continuing 2 i) (1,167) (1,047) (1,962)
operations
Discontinued 2 i) 20 (43) (20)
operations
(1,147) (1,090) (1,982)
Discontinued
operations:
Permanent diminution
in value of - - (18)
investments
Profit on disposal 973 - 34
of investments
Profit on the sale 10 32 172
of fixed assets
(164) (1,058) (1,794)
Net interest payable - (117) (169)
LOSS ON ORDINARY
ACTIVITIES BEFORE
TAXATION (164) (1,175) (1,963)
Tax on loss on 3 - - -
ordinary activities
LOSS ON ORDINARY
ACTIVITIES AFTER
TAXATION (164) (1,175) (1,963)
Minority interests (6) - -
(equity)
LOSS FOR THE
FINANCIAL PERIOD (170) (1,175) (1,963)
Loss per share - 5 (0.42)p (4.22)p (6.61)p
basic
CONSOLIDATED BALANCE SHEET
AS AT 30 APRIL 1998
30 April 30 April 1 31 October
1998 997 1997
Notes Unaudited Unaudited Audited
#'000 #'000 #'000
FIXED ASSETS
Intangible 1,361 - 714
Tangible assets 2 iv) 2,636 5,677 2,371
Investments - 1,339 -
3,997 7,016 3,085
CURRENT ASSETS
Stocks 14 - 34
Investments 2 v) 543 - 1,315
Debtors 1,129 412 810
Cash at bank and 1,980 770 480
in hand
3,666 1,182 2,639
CREDITORS:
amounts falling 6 (6,285) (3,011) (4,175)
due within one
year
NET CURRENT
LIABILITIES (2,619) (1,829) (1,536)
TOTAL ASSETS LESS
CURRENT 1,378 5,187 1,549
LIABILITIES
CREDITORS:
amounts falling
due after more - (3,011) -
than one year
1,378 2,176 1,549
CAPITAL AND
RESERVES
Called up share 8,342 6,058 6,357
capital
Shares to be - 1,982 1,982
issued
Share premium 583 542 583
account
Revaluation - 35 -
reserve
Goodwill write off (4,483) (4,287) (4,473)
reserve
Profit and loss (3,101) (2,187) (2,931)
account
Shareholders' 1,341 2,143 1,518
funds - equity
Minority interest 37 33 31
- equity
1,378 2,176 1,549
NOTES TO THE INTERIM STATEMENT
1.BASIS OF PREPARATION
The profit and loss account and balance sheet have been prepared on
a basis consistent with the statutory financial statements for the
period ended 31 October 1997.
The financial information contained in this statement does not
constitute statutory accounts within the meaning of section 240 of
the Companies Act 1985. The abridged results for the 12 months to
31 October 1997 are extracted from the financial statements for
the respective period which, together with an unqualified
auditors' report thereon, has been delivered to the Registrar of
Companies. The results for the 6 months to 30 April 1998 are
unaudited.
2. ACCOUNTING POLICIES
i)For the purposes of the financial statements, the Internet
access activities have
been classified as continuing activities and the property
investment activities as discontinued activities.
ii)Turnover is represented by subscription income and rental
income. The accounting treatment is as follows:
Subscription income (continuing activity): subscriptions
received in advance are credited to the profit and loss account
in equal monthly amounts appropriate to the period for which
the subscriptions relate, with the unexpired portion carried
forward as deferred income which is included in the Creditors
amounts due within one year figure; see note 6.
Rental income (discontinued activity): rental income from the
letting of the remaining investment properties is accounted for
on a receivable basis.
iii)No interest or other expenses have been capitalised during
the period.
iv)Properties held as tangible fixed assets are included in
the balance sheet at the 31 October 1997 valuation.
v)Current asset investments are held at the lower of cost and net
realisable value.
3.TAX
There is no tax payable in the period due to the losses generated
by the Group.
4.DIVIDENDS
The Directors do not propose the payment of a dividend for the
period.
5.LOSS PER ORDINARY SHARE
The loss per ordinary share has been calculated on the basis of
the loss attributable to shareholders after taxation and minority
interests of #170,000 (30 April 1997 - loss #1,175,000) and on the
weighted average number of ordinary shares of 20p each in issue of
40,391,377 (30 April 1997 - 27,848,681).
6.CREDITORS: amounts falling due within one year
Included within Creditors falling due within one year is #2,966,000
(31 October 1997 - #1,278,000) of deferred income.
7.OTHER INFORMATION
i) The statement was approved by the Directors on 9 June 1998 and
is being sent to all the shareholders on the register today. A
copy can be obtained by the public from the Company Secretary
at 113-123 Upper Richmond Road, London, SW15 2TL.
ii)For further information on the Company and its subsidiaries,
the Company's website, www.itg.co.uk provides details of the
latest press releases and further background on the Company.
END
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