Invox PLC
11 November 2002
Invox plc ('Invox' or 'the Company')
Preliminary Results for the 15 month period ended 30 June 2002
Highlights:
• Major improvement on previous year
• Profits of £4.3 million for the 12 months to 30 June 2002
• Earnings per share 0.22p before goodwill amortization
• Final dividend of 0.04p - total 0.07p
• New direct mail division makes good progress
• Very encouraging start to the current year
Chairman's statement
I am pleased to report a significant improvement in the Company's fortunes over
the past year.
On turnover of £13.3 million in the fifteen month period to 30 June 2002 the
Company made pre-tax profits of £3.4 million before a goodwill amortisation
charge of £816,000. The charging of goodwill amortisation to the profit and loss
account is in accordance with FRS 10. Like Warren and HM Inland Revenue, we
prefer to ignore it.
Fully diluted earnings per share were 0.22p before goodwill amortisation or
0.15p after goodwill amortisation.
Furthermore, this period included only 10 months' ownership of the Company's
major trading subsidiary, TPC Telecoms Ltd ('TPC') which was acquired in August
2001. Had the Company owned TPC for a full 12 months, pre-tax profits would have
amounted to approximately £4.3 million before goodwill amortisation.
In view of this strong performance your directors are recommending a final
dividend of 0.04p per share, bringing the total payment for the period to 0.07p
per share.
The competition card business in the UK and Ireland remains a major source of
turnover and profits and as things stand, the directors anticipate that this
will be the case for the foreseeable future. The company has had some success in
generating additional premium rate business through the sale of ringtones and
logos. A trial of the competitions in mainland Europe has produced reasonable
rates of consumer response but, as yet, it is too soon to forecast whether or
when this project will have a big impact on group profits. Success there, as in
the UK, will continue to depend on the regulatory environment.
We are also now exploiting our substantial database: our new direct mail arm
works in partnership with a growing number of third party suppliers to market
the partner's goods and services to our existing customers. We anticipate this
activity will make a significant contribution to earnings in the current year.
We are investigating the prospects for winning additional business via SMS (text
messaging) and e-mail, on which we hope to have further news for shareholders
when we announce the interim results for the half year to 31 December.
We are keen to expand the group by acquisition where we see the prospect of a
good return without great risk. Since acquiring TPC we have formed the view that
the premium rate sector is a neglected area offering good cash returns on
investment and easily defined earnings. We hope to broaden our activities in
this field and are confident that the market will catch up with our thinking
once we have built a more substantial business. We would rather build a
profitable business in an unfashionable sector than the reverse. We are pursuing
a number of possibilities and will report back to shareholders with any major
developments.
We are grateful for the hard work of employees, and the Board is taking advice
on the establishment of an employee benefit trust for the benefit of our staff.
Current trading
Invox has made a very encouraging start to the year. Direct marketing is
producing good results and we have also managed to achieve price increases in
some of our promotions. One of the plus points of our business is that we are
able to see very quickly whether our actions have produced positive results: so
far, so good.
Dividends
If approved at the AGM to be held on 10 December 2002, the final dividend of
0.04p will be paid on 9 January 2003 to shareholders on the register on 29
November 2002.
Stephen Hargrave 11 November 2002
Chairman
Group profit and loss account
for the 15 months to 30 June 2002
Note From
15 months to incorporation
on 27 January
30 June 2002 2000 to 31
March
2001
Existing Continuing operations
operations Acquisitions Total Total
£000 £000 £000 £000
Turnover 51 13,243 13,294 104
Cost of sales (76) (8,923) (8,999) (61)
Gross (loss)/profit (25) 4,320 4,295 43
Operating expenses (including goodwill (263) (1,520) (1,783) (1,218)
amortisation of £816,000 (2001: £Nil))
Operating (loss)/profit (288) 2,800 2,512 (1,175)
Interest receivable and similar income 207 167
Interest payable (130) -
Profit/(loss) on ordinary activities before 2,589 (1,008)
taxation
Tax on profit on ordinary activities 2 (958) -
Profit/(loss) for the financial period 1,631 (1,008)
Dividends 3 (1,019) -
Retained profit/(loss) for the period 612 (1,008)
Earnings/(loss) per ordinary share - basic 4 0.15p (0.26p)
Fully diluted earnings/(loss) per ordinary 4 0.15p (0.26p)
share
The group had no recognised gains or losses in either period other than those
included in the profit and loss account.
Group balance sheet
at 30 June 2002
Note
30 June 2002 31 March 2001
£000 £000 £000 £000
Fixed assets
Intangible assets - goodwill 15,391 -
Tangible assets 42 90
15,433 90
Current assets
Stock 65 -
Debtors 630 5
Cash at bank 5,075 2,130
5,770 2,135
Creditors: amounts falling due within one (6,165) (196)
year
Net current (liabilities)/assets (395) 1,939
Total assets less current liabilities 15,038 2,029
Creditors: amounts falling due after more -
than one year (407)
Net assets 14,631 2,029
Capital and reserves
Called up share capital 7,278 2,033
Shares to be issued 5 1,500 -
Share premium account 1,004 1,004
Merger reserve 4,954 -
Profit and loss account (105) (1,008)
Equity shareholders' funds 6 14,631 2,029
Group cash flow statement
for the 15 months to 30 June 2002
Note From
Incorporation
15 months on 27 January
to 30 June 2000 to
2002 31 March
2001
£000 £000
Net cash inflow/(outflow) from operating activities 7 3,520 (957)
Returns on investments and servicing of finance 77 167
Taxation (1,574) -
Capital expenditure and financial investment - (117)
Acquisitions and disposals 1,359 -
Equity dividends paid (437) -
Net cash inflow/(outflow) before management of liquid 2,945 (907)
resources
and financing
Management of liquid resources (2,562) -
Financing
Issue of shares (net of expenses) - 3,037
Increase in cash in the period 383 2,130
Reconciliation of net cash flow to movement in net funds
for the 15 months to 30 June 2002
From
incorporation
15 months to on 27 January
30 June2002 2000 to 31
March 2001
£000 £000
Increase in cash in the period 383 2,130
Cash outflow from increase in liquid resources 2,562 -
Changes in net funds resulting from cash flows 2,945 2,130
Issue of loan notes on acquisition of subsidiary (3,110) -
Movement in net funds in the period (165) 2,130
Net funds at beginning of period 2,130 -
Net funds at end of period 1,965 2,130
Notes to the preliminary results for the period ended 30 June 2002
1. Basis of preparation
The financial statements have been prepared in accordance with applicable
Accounting Standards and under the historical cost accounting rules.
The above financial information, which has been extracted from the audited
accounts of the Company, does not constitute statutory accounts within the
meaning of S240 Companies Act 1985.
The information relating to the period ended 31 March 2001 is extracted from
the audited accounts of the Company, which have been filed at Companies
House and on which the auditors have issued an unqualified opinion.
2. Tax on profit/(loss) on ordinary activities
15 months to 30 June 2002 From incorporation on 27 January 2000 to 31
March 2001
£000 £000
UK corporation tax
Current tax on income for the period 969 -
Adjustments in respect of prior periods 1 -
Total current tax 970 -
Deferred tax
Origination of timing differences (12) -
Tax on profit on ordinary activities 958 -
3. Dividends
15 months to 30 June 2002 From incorporation on 27 January 2000 to 31
March 2001
£000 £000
Interim dividend of 0.03p (2001: Nil) 437 -
per share
Final dividend proposed of 0.04p (2001: 582 -
Nil) per share
1,019 -
4. Earnings per ordinary share
Earnings per ordinary share has been calculated by dividing the profit for the financial period of £1,631,000 (period
from incorporation on 27 January 2000 to 31 March 2001: loss of £1,008,000) by the weighted average number of
ordinary shares in issue during the period of 1,106,000,022 (period from incorporation on 27 January 2000 to 31 March
2001: 389,984,424).
As in the prior period, share options have no dilutive effect as they are priced at a value above the average value
of the company's shares.
5. Acquisitions
In the period, the group made the following acquisition:
% acquired Consideration including costs
£000
TPC Telecoms Limited 6 August 2001 100% 16,727
The net book values acquired, to which no fair value adjustments were necessary, are set out below:
£000
Stock 169
Debtors 283
Prepayments 23
Cash 2,986
Creditors due within one year (2,941)
Net assets acquired 520
Goodwill on acquisition 16,207
Consideration payable including costs 16,727
Total consideration payable 16,500
Less: Satisfied by issue of shares (10,490)
To be satisfied by issue of shares (1,500)
Satisfied by issue of loan notes (3,110)
Cash consideration payable 1,400
Costs of acquisition 227
Cash balances acquired (2,986)
Cash inflow arising on acquisition (1,359)
The subsidiary undertaking acquired during the period contributed £964,000 to the group's net operating cash inflows,
paid £83,000 in respect of net returns on investments and servicing of finance and paid £1,563,000 in respect of
taxation.
Between 1 July 2001 and the date of acquisition, TPC Telecoms Limited made an operating profit of £890,000 and a
pre-tax profit of £911,000 on turnover of £3,080,000. Tax for the period amounted to £274,000. From incorporation on
6 April 2000 to 30 June 2001 TPC Telecoms Limited made a profit after tax of £1,882,000.
Under the terms of the acquisition agreement initial consideration of £15,000,000 was paid on completion made up of
£1,400,000 in cash, and the issue of £3,110,000 of loan notes and 1,049,000,000 ordinary shares of 0.5p at a fair
value consideration of 1p per share.
In accordance with the acquisition agreement, further consideration of £1,500,000 is payable as the profits before
tax of TPC Telecoms Limited (before group reallocations) for the financial year ended 30 June 2002 exceeded
£4,500,000. The additional consideration will be satisfied in full by the allotment of a further 150,000,000 0.5p
ordinary shares credited as fully paid at 1p per share.
6. Reconciliation of movements in equity shareholders' funds
Group
30 June 2002 31 March 2001
£000 £000
Opening shareholders' funds 2,029 -
Profit/(loss) for the financial period 1,631 (1,008)
Dividends (1,019) -
Share issues (net of expenses) 10,490 3,037
Shares to be issued 1,500 -
Closing equity shareholder's funds 14,631 2,029
7. Reconciliation of operating profit/(loss) and net cash inflow/(outflow) from operating activities
15 months to 30 June 2002 From incorporation on 27 January 2000 to
31 March 2001
£000 £000
Operating profit/(loss) 2,512 (1,175)
Depreciation charge 48 27
Goodwill amortisation 816 -
Decrease in stock 104 -
Increase in debtors (307) (5)
Increase in creditors 347 196
Net cash inflow/(outflow) from operating 3,520 (957)
activities
8. Report and Accounts and Annual General Meeting
The report and accounts will be sent to shareholders shortly and copies will be available for collection at or by
writing to Invox Plc, Galbraith House, 141 Great Charles Street, Birmingham, B3 3LG.
The Annual General Meeting of the Company will be held at 12pm on 10 December 2002 at the offices of Memery Crystal,
31 Southampton Row, London, WC1B 5HT.
For further information:
Stephen Hargrave, Chairman, Invox Plc 0207 242 0735
Jerry Reidy, Finance Director, Invox Plc 0121 214 9900
END
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