RNS Number:6487A
Virtual Internet PLC
19 March 2001
Date: 19 March 2001
Enquiries:
Jason Drummond, CEO
Jonathan Wales, CFO
Virtual Internet plc Tel 020 7460 4060
John Bick, Holborn Tel: 020 7929 5599
john.bick@holbornpr.co.uk
Virtual Internet plc
Results For The Three Month Period Ended 31 January 2001
Virtual Internet plc, a leading provider of Internet hosting, naming and
online brand management services for businesses internationally, today
announces its results for the three month period ended 31 January 2001.
Financial Highlights 3 month 3 month Year
period period ended
ended ended 31 October
31 January 31 January 2000
2001 2000
# # #
Turnover 1,774,387 1,140,118 6,259,257
Gross profit 1,200,262 861,759 4,383,461
Adjusted loss before taxation* (1,241,228) (880,549) (4,342,755)
Loss on ordinary activities
before taxation (2,152,178) (2,009,642) (7,998,119)
Adjusted loss per share 5.02p 4.13p 18.89p
Loss per share - basic and 8.71p 9.42p 34.81p
diluted
Cash at bank 16,947,565 182,948 19,197,011
*Adjusted by excluding goodwill amortisation and employee benefit trust
charge.
* Turnover growth of 56 per cent for the three month period ended 31
January 2001 against the three month period ended 31 January 2000
* Strong cash position with #16.95 million at period end
* Acquisition of WebControl in Germany
* RegistryPro joint venture selected by ICANN to run new .pro registry
* Major client wins across the Net Searchers international network
* Continued focus on growing revenue streams from higher value services
and applications
First Quarter Report
3 months ended 31 January 2001
Turnover for the three months ended 31 January 2001 increased by 56 per cent
to #1,774,387 from #1,140,118 for the three month period ended 31 January
2000. Gross profit was #1,200,262 compared with #861,759 for the three month
period ended 31 January 2000. The loss before taxation, goodwill amortisation
and the Employee Share Incentive Scheme charge amounted to #1,241,228 compared
with #880,549 for the three month period ended 31 January 2000. The Group had
cash resources of #16.95 million as at 31 January 2001.
Managed Web and Application Hosting Services
The Group has continued to drive revenue from new customers and existing
customers taking a broader range of higher value hosting services. Virtual
Internet's new hosting infrastructure will enable the Group to offer state of
the art hosting services including "gigabit ethernet" connectivity (between 10
and 500 times greater than many other hosting operations). An enhanced
product range exploiting this infrastructure investment will be launched in
the next quarter and is expected to drive significant revenue in due course.
The Group acquired WebControl in Germany for a consideration of #885,000
immediately after the end of the three month period under review. WebControl
is currently in the top four hosting companies in that market for quality and
service (according to independent research by webhostlist.de)
The acquisition sees the Group completing its planned European hosting network
with operations in the UK, France, Italy and Germany. These four European
markets currently account for 70 per cent of Europe's web hosting (according
to IDC, 2000) and continue to offer significant growth opportunities.
At the end of the period (excluding WebControl), the number of active hosted
and managed domains had increased to 97,000 from 85,000 at the end of the
previous financial year.
Net Searchers
Net Searchers, the Group's internet brand and trademark protection services
business, has continued to perform strongly and maintains a high profile in
the on-line intellectual property community. We are expanding our US
operations to make the most of the significant opportunities that exist to
sell Net Searchers' services directly to the large number of global brand
owners operating from the United States.
Net Searchers continues to capitalise on the current climate of substantial
activity in on-line brand protection issues. New domain name developments,
such as the seven new generic Top Level Domains (gTLDs), "multi-lingual"
domains (MLDs) and the ever-changing regulations of the 244 country-code Top
Level Domains (ccTLDs), have driven an increase in demand for the specialised
services that Net Searchers offers.
RegistryPro
During the quarter, RegistryPro, the Group's 50:50 joint venture with
register.com, was selected to run the new .pro TLD. The new domain name is
aimed at lawyers, accountants, doctors and other professionals who will have
to prove their credentials in order to register.
RegistryPro will be the sole global registry for the .pro name in the same
way as all .com registrations have been maintained by Verisign (previously
Network Solutions) and has significantly enhanced Virtual Internet's global
profile in the naming industry
Negotiations between ICANN and all seven selected new TLDs are continuing and
it is expected that contracts with RegistryPro will be concluded in the near
future. It is anticipated that once contracts are signed, the new registry
will be able to launch its services in the second half of our financial year.
Outlook
Virtual Internet has made encouraging progress during the period, with growth
in turnover and a level of losses over the period in line with the Board's
expectations. We are confident of delivering strong revenue growth and
building on our position as a leading provider of Internet services to
businesses internationally, whilst achieving the stated aim of reaching
profitability in the financial year 2001/2002 within our current financial
resources.
Jason Drummond
Chief Executive Officer
19 March 2001
SUMMARISED GROUP PROFIT AND LOSS ACCOUNT
Unaudited Unaudited
3 month 3 month
period period Year
ended ended ended
31 January 31 January 31 October
Note 2001 2000 2000
# # #
Turnover 1,774,387 1,140,118 6,259,257
Cost of sales 574,125 278,359 1,875,796
-------- -------- --------
Gross profit 1,200,262 861,759 4,383,461
-------- -------- --------
Selling and distribution costs 877,126 319,263 2,068,456
Administrative expenses:
Before goodwill amortisation
and exceptional items 1,746,520 1,418,153 7,186,580
Goodwill amortisation 835,413 814,432 3,293,997
Employee share incentives 2 75,537 314,661 361,367
-------- -------- --------
2,657,470 2,547,246 10,841,944
-------- -------- --------
Group operating loss (2,334,334) (2,004,750) (8,526,939)
Share of loss of joint venture (21,596) - (70,264)
-------- -------- --------
Total operating loss (2,355,930) (2,004,750) (8,597,203)
Interest receivable and similar income 214,384 1,552 655,893
Interest payable and similar charges (10,632) (6,444) (56,809)
-------- -------- --------
Loss on ordinary activities
before taxation (2,152,178) (2,009,642) (7,998,119)
Tax on loss on ordinary activities - - -
-------- -------- --------
Transfer to reserves (2,152,178) (2,009,642) (7,998,119)
-------- -------- --------
Loss per share
- basic and diluted 3 8.71p 9.42p 34.81p
Loss per share
- adjusted 3 5.02p 4.13p 18.89p
Unaudited Unaudited
3 month 3 month Year
period ended period ended ended
31 January 31 January 31 October
2001 2000 2000
# # #
Loss for the financial period
attributable to members
of the parent company (2,152,178) (2,009,642) (7,998,119)
Exchange difference on
retranslation of net assets of
subsidiary undertakings (15,227) (5,594) 6,882
-------- -------- --------
Total recognised loss relating to
the period (2,167,405) (2,015,236) (7,991,237)
-------- -------- --------
GROUP BALANCE SHEET
Unaudited Unaudited
31 January 31 January 31 October
2001 2000 2000
# # #
FIXED ASSETS
Intangible assets 10,069,361 13,097,671 10,902,726
Tangible assets 2,702,045 997,505 1,708,569
-------- -------- --------
12,771,406 14,095,176 12,611,295
-------- -------- --------
CURRENT ASSETS
Stocks 204,925 24,432 247,471
Debtors 2,723,324 1,407,330 2,523,330
Cash at bank and in hand 16,947,565 182,948 19,506,529
-------- -------- --------
19,875,814 1,614,710 22,277,330
CREDITORS: amounts falling due
within one year 3,028,289 2,626,652 3,194,674
-------- -------- --------
NET CURRENT ASSETS/(LIABILITIES) 16,847,525 (1,011,942) 19,082,656
-------- -------- --------
TOTAL ASSETS LESS CURRENT LIABILITIES 29,618,931 13,083,234 31,693,951
CREDITORS: amounts falling due after
more than one year 167,559 261,409 179,710
PROVISIONS FOR LIABILITIES AND CHARGES 18,894 156,768 23,271
-------- -------- --------
29,432,478 12,665,057 31,490,970
-------- -------- --------
CAPITAL AND RESERVES
Called up share capital 6,207,229 5,330,966 6,177,229
Share premium account 26,443,753 1,862,838 26,443,753
Other reserves 11,352,294 11,898,425 11,734,661
Profit and loss account (14,570,798) (6,427,172) (12,864,673)
-------- -------- --------
Shareholders' funds: equity 29,432,478 12,665,057 31,490,970
-------- -------- --------
Unaudited Unaudited
3 month month Year
period period ended
ended ended
31 January 31 January 31 October
2001 2000 2000
Note # # #
Net cash outflow from
operating activities 4 (1,342,184) (383,004) (5,223,604)
-------- -------- --------
Returns on investments and servicing of finance
Interest received 214,384 1,552 655,893
Interest paid (10,632) (6,444) (56,809)
-------- -------- --------
203,752 (4,892) 599,084
-------- -------- --------
Taxation
Corporation tax paid - - -
-------- -------- --------
Capital expenditure
Payments to acquire tangible
fixed assets (1,107,267) (278,436) (1,283,795)
-------- -------- --------
Acquisitions and disposals
Purchase of subsidiary undertaking - - (284,620)
Investment in joint venture (21,596) - (70,264)
-------- -------- --------
(21,596) - (354,884)
-------- -------- --------
NET CASH OUTFLOW BEFORE
MANAGEMENT OF LIQUID RESOURCES
AND FINANCING (2,254,295) (666,332) (6,263,199)
-------- -------- --------
MANAGEMENT OF LIQUID RESOURCES
Decrease/(increase) in short
term deposits 3,200,000 (20) (18,420,776)
-------- -------- --------
Financing
Issue of ordinary share capital 30,000 - 27,013,763
Issue costs - - (2,098,085)
Movement in short-term loans - 8,976 (19,204)
Movement in long-term loans (12,151) 95,844 14,145
Repayment of loan notes - - (279,224)
-------- -------- --------
17,849 104,820 24,631,395
-------- -------- --------
INCREASE/(DECREASE) IN CASH 950,554 (561,532) (52,580)
-------- -------- --------
GROUP STATEMENT OF CASHFLOWS
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS/(DEBT)
Unaudited Unaudited
3 month 3 month
period period Year
ended ended ended
31 January 31 January 31 October
2001 2000 2000
# # #
Increase/(decrease) in cash 950,554 (561,532) (52,580)
Cash outflow/(inflow) from movement
in loans 12,151 (104,820) 284,283
Cash (inflow)/outflow from movement
in liquid resources (3,200,000) 20 18,420,776
-------- -------- --------
Change in net funds resulting
from cash flows (2,237,295) (666,332) 18,652,479
-------- -------- --------
Movement in net funds/(debt) (2,237,295) (666,332) 18,652,479
Net funds at beginning of period 18,971,661 319,182 319,182
-------- -------- --------
Net funds/(debt) at end of period 16,734,366 (347,150) 18,971,661
-------- -------- --------
NOTES FOR THE UNAUDITED THREE MONTH PERIOD ENDED 31 JANUARY 2001
1. basis of preparation of interim financial information
The financial information for all periods has been prepared on the basis of
the accounting policies set out in the Group's statutory accounts for the year
ended 31 October 2000. Expenses are accrued in accordance with the same
principles used in the preparation of the accounts.
2. EMPLOYEE SHARE INCENTIVES
In accordance with UITF Abstract 17, "Employee Share Schemes", the Company
recognises a charge to the profit and loss account for the amount by which the
fair market value of any share options or benefits likely to be issued exceeds
their respective exercise price on the date of the grant. These costs are
recognised on a straight line basis over the period to which they relate.
In accordance with UITF abstract 25, "National Insurance Contributions on
Share Option Gains", the Company provides for national insurance contributions
on options granted or benefits likely to be issued on or after 6 April 1999
under its Unapproved Share Option Schemes and Employee Benefit Trust.
Provision is made over the vesting period of the options on benefits likely to
be issued at the prevailing rate of Employers National Insurance on the
difference between the period end share value and the grant price, being the
directors' best estimate of the ultimate liability at each period end.
During the year ended 31 October 2000, the trustees of the Employee Benefit
Trust ("EBT") determined that the potential benefits which had been made
available to employees of the Group since the EBT was set up should be awarded
and that no more awards should be made under the scheme as the Group had set
up new employee share incentive schemes.
On the setting up of the EBT it was envisaged that the award to beneficiaries
would be made only in shares. However, some beneficiaries of the trust were
given the choice of whether to receive their award in shares or cash. As a
result of this change the UITF 17 charge associated with awards made in cash
has been reversed and replaced with a charge which reflects the cash to be
paid to the beneficiary.
Unaudited Unaudited
3 month 3 month
period period Year
ended ended ended
31 January 31 January 31 October
2001 2000 2000
# # #
Recognised in arriving at operating loss:
Employee Benefit Trust ("EBT")
- UITF 17 charge/(credit) - 233,393 (29,776)
- Employer's National Insurance - 81,268 (30,362)
- Benefit awarded in cash - - 248,829
Long Term Incentive Plan ("LTIP")
- UITF 17 charge 79,914 - 149,405
- Employer's National Insurance (4,377) - 23,271
-------- -------- --------
75,537 314,661 361,367
-------- -------- --------
3. LOSS PER ORDINARY SHARE
Unaudited Unaudited
3 month 3 month Year
period period ended
ended ended 31
31 31 October
January January 2000
2001 2000
The calculation of basic loss per No. No. No.
ordinary share is based on the
effective weighted average number of
shares in issue during the period 24,710,560 21,323,864 22,978,598
---- ---- ----
The adjusted loss per share is based
on the loss after tax before goodwill
amortisation and the charge in connection
with the Employee Share
Incentives:
# # #
Loss after tax as reported 2,152,178 2,009,642 7,998,119
Less: Goodwill amortisation (835,413) (814,432)(3,293,997)
Charge in connection with Employee
Share Incentives (75,537) (314,661) (361,367)
---- ---- ----
1,241,228 880,549 4,342,755
---- ---- ----
The effective weighted average number of ordinary shares used in the adjusted
loss per share calculation are the same as used in calculating the basic loss
per share.
4. reconciliation of operating loss to net cash outflow from operating
activities
Unaudited Unaudited
3 month 3 month
period period Year
ended ended ended
31 January 31 January 31 October
2001 2000 2000
# # #
Operating loss (2,334,334) (2,004,750) (8,526,939)
Depreciation 111,744 51,530 345,824
Amortisation of goodwill 835,413 814,432 3,293,997
Decrease/(increase) in stocks 42,546 (4,432) (227,471)
Increase in debtors (199,994) (381,823) (1,771,470)
Increase in creditors 126,904 827,378 1,595,055
Decrease in other provisions (4,377) 81,268 (52,229)
Charge in connection with UITF 17 79,914 233,393 119,629
-------- -------- --------
Net cash outflow from operating
activities (1,342,184) (383,004) (5,223,604)
-------- -------- --------
5. Publication of non-statutory accounts
The financial information contained in this statement does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. The
financial information for the full preceding period is based on the statutory
accounts for the financial period ended 31 October 2000. Those accounts, upon
which the auditors issued an unqualified opinion, have been delivered to the
Registrar of Companies.
INDEPENDENT REVIEW REPORT
to Virtual Internet plc
Introduction
We have been instructed by the Company to review the financial information set
out on pages 4 to 11 and we have read the other information contained in the
report for the three month period ended 31 January 2001 and considered whether
it contains any apparent misstatements or material inconsistencies with the
financial information.
Directors' responsibilities
The report for the three months ended 31 January 2001, including the financial
information contained therein, is the responsibility of, and has been approved
by the directors. The Listing Rules of the Financial Services Authority
require that the accounting policies and presentation applied to the figures
for the three month period ended 31 January 2001 should be consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999
/4 issued by the Auditing Practices Board. A review consists principally of
making enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed
in accordance with Auditing Standards and therefore provides a lower level of
assurance than an audit. Accordingly we do not express an audit opinion on
the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the three months
ended 31 January 2001.
Ernst & Young
London
19 March 2001
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