Date:  14 September 2000

 

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 Nine Month Period Ended 31 July 2000

 

Virtual Internet plc, a leading provider of Internet hosting, naming and online brand management services for businesses internationally, today announces its results for the nine-month period ended 31 July 2000.

 

Financial Highlights

3 month period

ended

31 July 2000

9  month

period

ended

31 July 2000

10  month

period

ended

31 July 1999

13 month

period

ended

31 October 1999

 

 

Turnover

 1,622,300

 4,162,224

    914,241

 1,885,553

 

Gross profit

 1,095,884

 2,905,816

    603,162

 1,189,734

 

Adjusted loss before taxation*

(1,003,287)

(2,888,583)

   (659,623)

(1,334,820)

 

Loss on ordinary activities before taxation

(1,990,051)

(6,237,385)

(2,644,803)

(4,406,343)

 

Adjusted loss per share

4.09p

12.84p

4.46p

7.76p

 

Loss per share - basic and diluted

8.01p

27.72p

17.87p

25.61p

 

Cash at bank

21,691,881

 21,691,881

    842,849

    828,815

 

 

 

 

 

 

 

*Adjusted by excluding goodwill amortisation and employee benefit trust charge.

 

 

        Continued focus on growing revenue streams from higher value services and applications

 

 

 

 

 


Third Quarter Report

9 months ended 31 July 2000

 

Turnover for the nine months ended 31 July 2000 increased by 355 per cent to 」4,162,224 from 」914,241 for the ten month period ended 31 July 1999.  Gross profit was 」2,905,816 compared with 」603,162 for the period ended 31 July 1999. Gross profit margins over the period were above 65 per cent.  The loss before taxation, goodwill amortisation and the Employee Benefit Trust charge amounted to 」2,888,583 compared with 」659,623 for the ten month period ended 31 July 1999.  The Group had cash resources of 」21.7 million as at 31 July 2000.

 

At the time of the Group痴 last interim statement, the Board highlighted that a detailed review of the International offices was being undertaken. Following this review, new senior management appointments have been made in Italy and the US and the Australian office has been closed. These actions focus the Group on the better prospects in Europe and the US.

 

The overall strategic objective for the Group remains clear; to build a dominant provider of managed web and application hosting services in Europe, and to become a global leader of Internet brand and trade mark protection services.

 

Managed Web and Application Hosting Services

 

The Group has been focused both on acquiring new customers and taking existing customers up the value chain into a broader range of higher value services. The strategy is proving successful as many customers take a broader range of the Group痴 services.

 

The Group has increased the number of active hosted and managed domains from 25,000 at 31 October 1999 to 73,000 at 31 July 2000 and following the earlier successful launch of the managed web and application hosting business the Group is encouraged by the rate at which new and existing customers are taking up higher value services. The board believes that due to the increasingly competitive pricing on domain names a proven ability to up sell customers to higher value services is key.

 

The board believes that the ongoing investment in application hosting services (ASP) will become an important revenue stream over the next two years, as the introduction of low cost and high performance Internet connectivity (DSL) will enable small to medium size businesses to benefit from lower cost, outsourced applications. Among the applications to be offered the Group will provide Microsoft Exchange 2000.

 

The wholesale partnership with Sage (announced August 2000) has confirmed the Group痴 position as a leading supplier of Internet services to the customers of established companies in the telecommunications and IT sectors.

 

During the period a key aim for the management was to ensure the successful launch of Nomodo, the Group痴 on-line automated domain name registration and hosting service.  Nomodo has now been launched into the UK market, and whilst it is too soon to make any meaningful appraisal, early indications show that the service has been well received by users. The phased European roll out of Nomodo will commence in Q4 2000.

 

2


 

Internet brand and trade mark protection services

 

Net Searchers the Group痴 Internet brand and trade mark protection services business, has continued to perform strongly.  Over the past three months it has successfully attracted a number of major new clients, including some significant successes from the recently opened office in Paris.

 

Outlook

 

Virtual Internet has made encouraging progress during the period, growing the revenue base in line with its expectations.  The Board is confident of delivering strong revenue growth and building on its position as a leading provider of Internet services to businesses internationally.

 

Jason Drummond

Chief Executive Officer

14 September 2000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3


SUMMARISED GROUP PROFIT AND LOSS ACCOUNT

_____________________________________________________________________________________

 

                                                                                                                       Unaudited      Unaudited

                                                                                                                            9 month        10 month        13 month

                                                                                                                              period             period             period

                                                                                                                               ended              ended              ended

                                                                                                                             31 July            31 July     31 October

                                                                                                         Note                2000                1999                1999

                                                                                                                                                                                     

 

Turnover                                                                                                         4,162,224            914,241         1,885,553

Cost of sales                                                                                                   1,256,408            311,079            695,819

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

Gross profit                                                                                                    2,905,816            603,162         1,189,734

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

Selling and distribution costs                                                                         986,024            270,125            640,862

 

 
Administrative expenses:

    Before goodwill amortisation and exceptional items                            5,057,769            952,468         1,792,123

    Goodwill amortisation                                                                                2,465,795         1,678,766         2,511,523

    Employee Benefit Trust charge                                                     2            876,012            340,795            635,500

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

                                                                                                                          8,399,576         2,972,029         4,939,146

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

                                                                                                                         (6,479,784)       (2,638,992)       (4,390,274)

Other operating income                                                                                             10                9,056              12,728

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

Group operating loss                                                                                   (6,479,774)       (2,629,936)       (4,377,546)

Share of (loss)/ profit of associated undertaking                                                    -                    (81)               2,483

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

Total operating loss: Group and share of associate                               (6,479,774)       (2,630,017)       (4,375,063)

Interest receivable and similar income                                                           353,130              14,283              13,105

Interest payable and similar charges                                                            (110,741)            (29,069)            (44,385)

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

Loss on ordinary activities before taxation                                              (6,237,385)       (2,644,803)       (4,406,343)

Tax on loss on ordinary activities                                                                              -                        -                        -

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

Retained loss for the period                                                                        (6,237,385)       (2,644,803)       (4,406,343)

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

 

Loss per share - basic and diluted                                                    3              27.72p              17.87p              25.61p

Loss per share adjusted                                                           3            12.84p             4.46p               7.76p              

 

 

 

 

 

 

 

 

4


GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

________________________________________________________________________

 

                                                                                                                 Unaudited            Unaudited                        

                                                                                                                      9 month              10 month        13 month

                                                                                                            period ended       period ended period ended

                                                                                                                       31 July                  31 July     31 October

                                                                                                                           2000                      1999                1999

                                                                                                                                                                                     

Loss for the financial period attributable to members

of the parent company                                                                           (6,237,385)           (2,644,803)       (4,406,343)

Exchange difference on retranslation of net assets of

subsidiary undertakings                                                                                8,470                      5,221              (5,593)

                                                                                                                                                                       覧覧覧覧               覧覧覧覧      覧覧覧覧

Total recognised loss relating to

the period                                                                                                 (6,228,915)           (2,639,582)       (4,411,936)

                                                                                                                                                                       覧覧覧覧               覧覧覧覧      覧覧覧覧

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5


 

GROUP BALANCE SHEET

____________________________________________________________________________________

                                                                                                                

                                                                                                                       Unaudited      Unaudited                        

                                                                                                                             31 July            31 July     31 October

                                                                                                                                 2000                1999                1999

                                                                                                                                                                                     

FIXED ASSETS

Intangible assets                                                                                          11,451,134       14,744,861       13,912,103

Tangible assets                                                                                              1,330,351            643,012            770,598

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

                                                                                                                        12,781,485       15,387,873       14,682,701

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

CURRENT ASSETS

Stocks                                                                                                                   70,000              25,000              20,000

Debtors                                                                                                            1,761,368                   499,487                   751,860

Cash at bank and in hand                                                                           21,691,881            842,849            828,815

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

                                                                                                                        23,523,249         1,367,336         1,600,675

CREDITORS: amounts falling due within one year                                   2,042,668         1,737,285         1,595,411

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

NET CURRENT ASSETS/(LIABILITES)                                                        21,480,581           (369,949)               5,264

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

TOTAL ASSETS LESS CURRENT LIABILITIES                                          34,262,066       15,017,924       14,687,965

 

CREDITORS: amounts falling due after more than one year                      174,275            171,273            165,565

PROVISIONS FOR LIABILITIES AND CHARGES                                           68,505              34,383              75,500

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

                                                                                                                        34,019,286       14,812,268       14,446,900

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

CAPITAL AND RESERVES

Called up share capital                                                                                  6,094,729         5,203,466         5,330,966

Share premium account                                                                               26,017,369            836,938         1,862,838

Other reserves                                                                                              12,548,039       11,411,446       11,665,032

Profit and loss account                                                                              (10,640,851)       (2,639,582)       (4,411,936)

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

Shareholders funds: Equity                                                                       34,019,286       14,812,268       14,446,900

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

 

 

 

 

 

 

 

 

 

 

 

 

6


 

GROUP STATEMENT OF CASHFLOWS

______________________________________________________________________________________

 

                                                                                                                       Unaudited      Unaudited

                                                                                                                            9 month        10 month        13 month

                                                                                                                              period             period             period

                                                                                                                               ended              ended              ended

                                                                                                                             31 July            31 July     31 October

                                                                                                                                 2000                1999                1999

                                                                                                         Note                                                                    

Net cash outflow from

 operating activities                                                                   4        (3,234,042)        (712,769)        (1,323,427)

                                                                                                                                                                                        覧覧覧              覧覧覧      覧覧覧覧

Returns on investments and servicing of finance

Interest received                                                                                                353,130              14,283              13,105

Interest paid                                                                                                      (110,741)            (29,069)            (44,385)

                                                                                                                                                                                        覧覧覧              覧覧覧              覧覧覧

                                                                                                                             242,389             (14,786)            (31,280)

                                                                                                                                                                                        覧覧覧              覧覧覧              覧覧覧

Taxation

Corporation tax paid                                                                                                     -                        -                        -

                                                                                                                                                                                        覧覧覧              覧覧覧              覧覧覧

Capital expenditure

Payments to acquire tangible fixed assets                                                   (762,702)          (310,688)          (419,486)

                                                                                                                                                                                        覧覧覧              覧覧覧              覧覧覧

Acquisitions and disposals

Purchase of subsidiary undertaking                                                                          -           (574,222)          (574,222)

Net overdrafts acquired with subsidiary undertaking                                            -             (24,892)            (24,892)

                                                                                                                                                                                        覧覧覧              覧覧覧              覧覧覧

                                                                                                                                         -           (599,114)          (599,114)

                                                                                                                                                                                        覧覧覧              覧覧覧              覧覧覧

Net Cash outflow before

mANAGEMENT OF LIQUID RESOURCES AND financing                        (3,754,355)       (1,637,357)       (2,373,307)

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

MANAGEMENT OF LIQUID RESOURCES

Increase in short term deposits                                                                (21,420,776)        (650,000)           (279,224)

                                                                                                                                                                                覧覧覧覧              覧覧覧              覧覧覧

Financing

Issue of ordinary share capital                                                                   24,918,294         2,445,436         3,598,836

Movement in short-term loans                                                                          (7,519)              (3,218)              (8,808)

Movement in long-term loans                                                                             8,710             (34,262)            (17,130)

Repayment of loan notes                                                                                (279,224)                       -           (370,776)

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

                                                                                                                        24,640,261         2,407,956         3,202,122

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

(decrease)/Increase in cash                                                                 (534,870)           120,599            549,591

                                                                                                                                                                                        覧覧覧              覧覧覧              覧覧覧

 

 

 

 

7


 

GROUP STATEMENT OF CASHFLOWS

_______________________________________________________________________________________

 

RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS

 

                                                                                                                       Unaudited      Unaudited

                                                                                                                            9 month        10 month        13 month

                                                                                                                              period             period             period

                                                                                                                               ended              ended              ended

                                                                                                                             31 July            31 July     31 October

                                                                                                                                 2000                1999                1999

                                                                                                                                                                                     

 

(Decrease)/increase in cash                                                                           (534,870)           120,599            549,591

Cash outflow from movement in loans                                                          278,033              37,480            396,714

Cash outflow from increase in liquid resources                                      21,420,776            650,000            279,224

                                                                                                                                                                                覧覧覧覧      覧覧覧覧      覧覧覧覧

Change in net funds resulting from cash flows                                       21,163,939            808,079         1,225,529

Loans acquired with subsidiaries                                                                               -           (256,347)          (256,347)

Other                                                                                                                               -           (650,000)          (650,000)

                                                                                                                                                                                覧覧覧覧              覧覧覧              覧覧覧

Movement in net funds/(debt)                                                                    21,163,939            (98,268)            319,182

Net funds at beginning of period                                                                    319,182                        -                        -

                                                                                                                                                                                覧覧覧覧              覧覧覧              覧覧覧

Net funds at end of period/(debt)                                                               21,483,121            (98,268)            319,182

                                                                                                                                                                                覧覧覧覧              覧覧覧              覧覧覧

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8


 

NOTES FOR THE UNAUDITED NINE MONTH PERIOD ENDED 31 JULY 2000

_______________________________________________________________________________________

 

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痴 statutory accounts for the period ended 31 October 1999.  The financial information for the period ended 31 July 1999 has been restated accordingly.  Expenses are accrued in accordance with the same principles used in the preparation of the annual accounts.

 

 

2.        cost of share option scheme and employee benefit trust

In accordance with Urgent Issues Task Force Statement 17 (UITF 17), 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.

 

Certain employees of the company are potential beneficiaries of shares or share options which may become available to the Employee Benefit Trust of the company.  Although no employee has an absolute right to receive any shares or interest in shares under the terms of the Employee Benefit Trust, the company recognises a charge for the full amount of all potential entitlements communicated to employees as at the balance sheet date.  In addition, provision is made for the estimated liability for Employer痴 National Insurance on the expected number of shares which will be issued, using the market value of the company痴 shares at the balance sheet date.

 

                                                                                                                       Unaudited      Unaudited

                                                                                                                            9 month        10 month        13 month

                                                                                                                              period             period             period

                                                                                                                               ended              ended              ended

                                                                                                                             31 July            31 July     31 October

                                                                                                                                 2000                1999                1999

                                                                                                                                                                                     

Recognised in arriving at operating profit:

Charge in connection with Employee Benefit Trust (摘BT)                     883,007            306,414            560,000

Provision for Employer痴 National Insurance liability in

 connection with EBT                                                                                          (6,995)             34,381              75,500

                                                                                                                                                                                        覧覧覧              覧覧覧              覧覧覧

                                                                                                                             876,012            340,795            635,500

                                                                                                                                                                                        覧覧覧              覧覧覧              覧覧覧

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9


NOTES FOR THE UNAUDITED NINE MONTH PERIOD ENDED 31 JULY 2000

_______________________________________________________________________________________

3.             LosS PER ORDINARY SHARE

 

Unaudited

 9 month

 period

ended

31 July

2000

Unaudited

10 month

 period

ended

31 July

1999

 

13 month period

ended

31 October 1999

The calculation of basic loss per ordinary share is based on the effective weighted average number of shares in issue during the period

No.

22,499,443

覧覧覧

No.

14,802,486

覧覧

No.

17,206,480

覧覧

The adjusted loss per share is based on the loss after tax before goodwill amortisation and the charge in connection with the Employment Benefit Trust (摘BT):

 

 

 

 

Loss after tax as reported

6,237,385

2,644,803

4,406,343

Less: Goodwill amortisation

(2,465,795)

(1,678,766)

(2,511,523)

         Charge in connection with EBT

(883,007)

覧覧覧

(306,414)

覧覧

(560,000)

覧覧

 

2,888,583

覧覧覧

659,623

覧覧

1,334,820

覧覧

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

                                                                                                                            9 month        10 month        13 month

                                                                                                                              period             period             period

                                                                                                                               ended              ended              ended

                                                                                                                             31 July            31 July     31 October

                                                                                                                                 2000                1999                1999

                                                                                                                                                                                     

 

Operating loss                                                                                               (6,479,774)       (2,630,017)       (4,375,063)

Depreciation                                                                                                       198,123              81,672              62,884

Amortisation of goodwill                                                                              2,465,795         1,678,766         2,511,523

Share of loss/(profit) in associated undertakings                                                    -                     81               (2,483)

Increase in stocks                                                                                              (50,000)            (11,000)              (6,000)

Increase in debtors                                                                                       (1,009,508)          (273,561)          (525,934)

Increase in creditors                                                                                        765,310            100,495            376,146

Increase in other provisions (see note 2)                                                         (6,995)             34,381              75,500

Charge in connection with Employee Benefit Trust

 under UITF 17 (see note 2)                                                                             883,007            306,414            560,000

                                                                                                                                                                                        覧覧覧              覧覧覧      覧覧覧覧

Net cash outflow from operating activities                                               (3,234,042)          (712,769)       (1,323,427)

                                                                                                                                                                                        覧覧覧              覧覧覧      覧覧覧覧

10


NOTES FOR THE UNAUDITED NINE MONTH PERIOD ENDED 31 JULY 2000

_______________________________________________________________________________________

 

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 1999.  Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11


 

INDEPENDENT REVIEW REPORT

to Virtual Internet plc

 

Introduction

We have been instructed by the company to review the financial information set out on pages 2 to 9 and we have read the other information contained in the report for the nine month period ended 31 July 2000 and considered whether it contains any apparent misstatements or material inconsistencies with the financial information.

 

Directors responsibilities

The report for the nine months ended 31 July 2000, 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 nine month period ended 31 July 2000 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 nine months ended 31 July 2000.

 

 

Ernst & Young

London

14 September 2000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12