RNS Number:3287J
Earthport PLC
28 March 2003
Press Release 28 March 2003
earthport plc
Interim Results for the six months ended 31 December 2002
earthport plc ('earthport' or 'the Company'), the electronic payment services
company, today reports its interim results for the six months ended 31 December
2002.
Highlights
- Ladbrokes, signed in August, has operated without interruption. Live accounts are increasing weekly
- Licensing and Transaction revenue agreements with Sportingbet.com and Citywebwatch.com
- Launch of online media content payment system, mediaPay, and online gaming payments system,
EnsurePay
- Turnover increase to #282,000 from #97,000 in the same period of the previous year
- Operating losses narrowed substantially to #3,567,000 (2001: #6,977,000)
- Agreement signed with Betfair in January 2003
Commenting on the Results, Rick Flood, Chief Operating Officer, said: "
earthport's performance during the six months to 31 December 2002 is a
reflection of the hard work of its staff. A significant Company restructuring
in the first half of 2002 and a change of direction in the sales and marketing
strategy undertaken in the second half of the year, has reaped immediate
benefits for the Company, with three new customers adopting the payment system
in the period under review. Clients that have adopted our systems have reported
satisfaction with the operation and the reliability. earthport has also seen a
marked increase in the demand for its white-labelled products and is now capable
of handling three new business installations per month."
- Ends -
For further information, please contact:
earthport plc
Rick Flood, Chief Operating Officer Tel: +44 (0) 20 7907 1100
rick.flood@earthport.com www.earthport.com
Media enquiries:
Bankside Consultants
Ariane Vacher / Julian Bosdet Tel: +44 (0) 20 7444 4140
ariane.vacher@bankside.com www.bankside.com
Statement from the Board of Directors
The Board is pleased to report that the Company has made significant progress
during the period in its drive toward profitability.
Results
Turnover for the period increased to #282,000 (2001: #97,000) as a result of
significant product licensing agreements, which will continue to earn
transaction revenues in the future.
Substantial efforts have been made to stem losses and reduce amounts owed to
creditors. The operating loss narrowed substantially to #3,567,000 from
#6,977,000 for the same period the previous year and net administrative expenses
fell to #3,849,000 (2001: #7,074,000) as a result of the Company restructuring
that took place during the first half of 2002. This trend is continuing.
Cash at bank and in hand and restricted cash at 31 December 2002 was #1,440,000
(2001: #2,344,000).
Of the #4.9 million of Creditors due within one year stated in the balance
sheet, #1.9 million are not pressing. The Company has prepared a research and
development tax claim of #800,000 which is being submitted in April 2003.
Clients and new products
earthport launched two products during the period. The first to be introduced
was EnsurePay, a system utilising earthport's Universal Payment Network (UPN)
designed to handle the payment requirements of the growing online gaming and
betting industry.
In August 2002, the Company announced an online payment agreement with Ladbrokes
to provide the EnsurePay version of UPN to its global eGaming and tele-betting
business. Following trials in a number of territories, the system went live in
October.
SportingBet.com, the European operation of SportingBet plc, adopted the
EnsurePay product in December and Betfair, an independent person-to-person
sports betting exchange, signed up just after the period under review.
The second product was mediaPay, which was launched in late October together
with the announcement of its first customer, Citywebwatch.com, an online news
aggregation service. mediaPay, which is specifically designed for online media
content, enables both front-end payments, including business-to-consumer, as
well as back-end digital rights management for content providers and utilises
the micro payments feature of earthport's UPN.
Working capital
The Board has continued its efforts to secure the Company's ongoing working
capital requirements. In August 2002, #535,000 was raised through the issue of
Convertible Unsecured Loan Notes. Two months later in October, earthport
received an equity investment of #1,000,000 resulting in the issue of 40,000,000
new ordinary shares at 2.5p each. On 31 December 2002, two investors opted to
convert #550,000 of their total holdings of #600,000 of Convertible Loan Notes
into equity at 3.5p per share. The Total Asset Finance facility secured in
December 2002 is securitised.
Appointments
As announced on 29 November 2002, Ravi Manchanda and Christopher Crawford Keen
joined the Board as non-executive Directors of the Company.
Future prospects
The Directors believe that your Company is now positioned to take advantage of
the opportunities that are apparent in its market. Demand for earthport's
products has increased significantly in the last six months and this will
shortly be reflected in a small increase in sales staff, bringing the total
number of employees to 60.
The signing of three large gaming clients and the launch of mediaPay
demonstrates that there is a real demand for earthport's services. Last month,
the Company launched another new product, 'mobilePay', at the 3GSM World
Congress 2003 in Cannes, where it was received with great enthusiasm. This has
generated a significant number of sales leads, which are being pursued. The
Board is confident that the positive trend set in the six months ending 31
December 2002 will continue.
Andrew Ripley Rob Cunningham
Chairman Chief Executive Officer
27March 2003
CONSOLIDATED PROFIT AND LOSS ACCOUNT
for the period ended 31 December 2002
Unaudited Unaudited
6 months 6 months
ended ended
31 Dec 2002 31 Dec 2001
Notes #'000 #'000
TURNOVER 282 97
Administrative expenses (3,849) (7,074)
---------- ----------
Group OPERATING LOSS (3,567) (6,977)
Other operating/exceptional (expenses)/income 6 1,217 (1)
Loss on disposal of fixed assets (427) -
LOSS on Ordinary Activities before Interest and Taxation
(2,777) (6,978)
Interest receivable and similar income 3 3 42
Interest payable and similar charges 4 (255) (120)
---------- ---------
loss on ordinary activities before taxation (3,029) (7,056)
Taxation (6) -
---------- ----------
loss on ordinary activities for the PERIOD (3,035) (7,056)
---------- ----------
Loss per share - basic and diluted 5 1p 7p
---------- ----------
CONSOLIDATED BALANCE SHEET
for the period ended 31 December 2002
Unaudited Unaudited
As at As at
31 Dec 2002 31 Dec 2001
#'000 #'000
fixed ASSETS
Intangible assets 2,735 6,295
Tangible assets 3,017 5,905
---------- ---------
5,752 12,200
---------- ---------
CURRENT ASSETS
Stock 1,405 1,562
Debtors 217 528
Restricted Cash 956 -
Cash at bank and in hand 484 2,344
---------- ---------
3,062 4,434
creditors: amounts falling due within one year (4,948) (8,881)
---------- ---------
NET CURRENT liabilities (1,886) (4,447)
---------- ---------
TOTAL ASSETS LESS NET CURRENT LIABILITIES 3,866 7,753
creditors: amounts falling due after more than one year (2,997) (1,618)
---------- ---------
NET ASSETS 869 6,135
---------- ---------
CAPITAL AND RESERVES
Called up share capital 13,487 10,596
Share premium account 29,815 29,515
Other reserves 9,200 9,200
Profit and loss account (51,633) (43,176)
---------- ---------
Shareholders' funds - EQUITY INTERESTS 869 6,135
---------- ---------
consolidated cash flow statement
for the period ended 31 December 2002
Unaudited Unaudited
6 months 6 months
ended ended
31 Dec 2002 31 Dec 2001
#'000 #'000
net cash outflow from operating activities (2,112) (1,705)
---------- ----------
returns on investments and servicing of finance
Interest received 3 42
Interest paid (159) -
Interest element of finance lease rental payments (97) (120)
---------- ----------
net cash inflow from returns on investments and servicing of
finance
(253) (78)
---------- ----------
Taxation
UK corporation tax paid (6) -
capital expenditure and financial investment
Payment to acquire tangible assets - -
Receipts from sale of tangible fixed assets 135 9
---------- ----------
net cash inflow from capital expenditure and financial
investment
135 9
---------- ----------
net cash OUTFLOW BEFORE FINANCING (2,236) (1,774)
financing
Issue of ordinary share capital 2,649 -
Net movements in short term borrowings (428) 932
Net movements in long term borrowings 1,518 -
Capital element of finance lease rental payments (536) -
----------- -----------
Increase in cash during the PERIOD 967 (842)
----------- -----------
reconciliation of net cash flow to movements in net DEBT
Increase in cash during the period 967 (842)
Cash inflow from increase in debt and lease financing (554) (617)
------- -------
Movement in the period 413 (1,459)
Net debt at beginning of period (3,685) (533)
------- -------
Net debt at end of period (3,272) (1,992)
------- -------
RECONCILIATION OF GROUP OPERATING LOSS TO NET CASH FLOW FROM OPERATING ACTIVITIES
Unaudited Unaudited
6 months 6 months
ended ended
31 Dec 2002 31 Dec 2001
#,000 #,000
GROUP OPERATING LOSS (3,567) (6,977)
Depreciation of tangible fixed assets 976 1,826
Other operating/exceptional (expenses)/income 1,217 (1)
Amortisation of intangible fixed assets 1,120 1,732
Increase in operating debtors and prepayments (135) 863
Decrease in operating creditors and accruals (1,723) 852
NET CASH OUTFLOW FROM OPERATING ACTIVITIES (2,112) (1,705)
1 fundamental accounting concept
These interim results have been prepared on the assumption that the Company is a
going concern. The Company is engaged in a new and high growth industry where
losses are expected. These losses represent the Company's investment in its
development. At the date of approving these interim results, there exists a
fundamental uncertainty concerning the Company's ability to continue as a going
concern without the injection of additional equity capital.
The Company is dependent on its ability to generate significant revenues and
free cash flow from sales of its products to new customers. To date the Company
has entered into contracts to supply its core product to four significant
clients and is in advanced discussions with other substantial potential clients.
The directors believe that many of these potential clients will enter into
contracts with the Company. However, the timing and value of future sales is
difficult to predict with any certainty.
The directors are in discussion with their advisors and are pursuing the options
for raising further finance.
Given the fundamental uncertainties that sufficient revenues and free cash flows
will be generated to meet the Company's working capital requirements, the
Company will need to seek further finance and if adequate funds cannot be raised
as required, it may be forced into liquidation or receivership.
When assessing the foreseeable future the directors have looked at a period of
twelve months from the date of approval of the accounts. The directors consider
that the uncertainties referred to above cast doubt on the Company's ability to
continue as a going concern, nevertheless the directors believe that sufficient
revenues and finance will be generated, and therefore consider that it is
appropriate to prepare the Company's accounts on a going concern basis, which
assumes that the Company is to continue in operational existence for the
foreseeable future.
The interim results do not include any adjustment that would result should the
Company not generate sufficient revenues, free cash flow or raise additional
finance through further injections of debt or equity. It is not practical to
quantify the adjustments that might be required, but should any adjustments be
required they may be significant.
2. ACCOUNTING POLICIES
Basis of preparation
The interim results are prepared under the historical cost convention and on the
same basis as the annual financial statement.
3. INTEREST RECEIVABLE AND similar INCOME
Unaudited Unaudited
6 months 6 months
ended ended
31 Dec 2002 31 Dec 2001
#'000 #'000
Bank interest 3 42
----------- -----------
4. INTEREST PAYABLE
Unaudited Unaudited
6 months 6 months
ended ended
31 Dec 2002 31 Dec 2001
#'000 #'000
Bank and other loan interests 158 0
Finance charges payable under finance leases and hire purchase
contracts
97 120
------------- -------------
255 120
-------- --------
5. LOSS PER SHARE
The calculation of basis loss per share is based on the loss on ordinary
activities after taxation, namely #3,035,000 (2001 - #7,056,000) and on the
number of ordinary shares in issue: 221,604,299 at 31 December 2002 (2001
-105,963,220).
The loss attributable to ordinary shareholders for the purpose of calculating
the diluted loss per share is identical to those used for basic loss per
ordinary share. This is because the exercise of share option and other share
benefits would have the effect of reducing the loss per share and is therefore
not dilutive under the terms of FRS 14.
6. EXCEPTIONAL INCOME
As a result of a decision to stop supporting the Company's subsidiary, 101010
Limited, the Company will not be obliged to pay the debts of 101010 Limited
resulting in a gain of #1.217 million shown as an exceptional gain.
7. 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 statements for the year ended 30 June 2002, upon which the auditors
issued an unqualified opinion, have been delivered to the registrar of
Companies.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
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