Earthport Regulatory News (EPO)

18 Mar 2005 07:00

Earthport PLC18 March 2005 18 March 2005 earthport plc INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2004 earthport plc ('earthport'), the offline and online Internet paymentinfrastructure Group, today reports its Interim results for the six months ended31 December 2004. Results highlights: • Turnover rose 23% to £0.5m (2003: £0.4m) • Operating loss fell 31% to £2.4m (2003: £3.5m) • Cash outflow before financing fell 66% to £1.4m (2003: £4.1m) • Loss per share fell 30% to 0.5p (2003: loss of 0.7p) Rob Cunningham, Chief Executive of earthport plc commented, "These results demonstrate a continuing upward trend for earthport." For further information, please contact: earthport plc Tel: +44 (0) 20 7907 1100Rob Cunningham, CEO Financial Dynamics Tel: +44 (0) 20 7831 3113James Melville-Ross / Juliet Clarke Nabarro Wells Tel: +44 (0) 20 7710 7400David Nabarro About earthport earthport plc is a UK-based company specialising in the provision of secureelectronic payment systems. earthport's key product is its Universal PaymentNetwork, a payment infrastructure which links directly to traditional legacybanking systems, connecting the banking and electronic worlds. The UPN allowsparties to transact internationally using cash or cards, securely and affordablyvia any electronic enabled device. The UPN enables payment delivery in over 90countries and in multiple currencies. UPN is bi-directional and caters formicro to macro payments. Based in the West End and City of London, with 40 employees, earthport plc wasadmitted to the AIM (ticker: EPO) in 2001. Further information can be found at:www.earthport.com STATEMENT FROM THE BOARD OF DIRECTORS Results The Board is pleased to report that in the six months to 31 December 2004,turnover has grown 23% to £511,000 (2003: £416,000). The operating loss for theperiod has fallen 31% to £2,401,000 (2003: £3,496,000). The loss per share hasfallen to 0.5p (2003: 0.7p). Since the period end, the Group has received £1.75m of additional funding. Board Changes The Board would like to thank Chris Hall for his outstanding contribution to theGroup as CFO. Chris resigned at the end of January in order to return to thepublishing sector. Neil Clayton joined the board as an executive director andCFO on 1 March 2005. There have been a number of changes to the non-executive directors, with theresignation of Ravi Manchanda, having completed his two year term, and theresignations of Robert Rakison and Chris Keen in February 2005. The Board wouldlike to thank all three for their valuable contribution towards rebuilding theGroup. Further non-executive appointments will be announced in the near futureas required for the next stage of the Group's development. As the Group progresses towards its immediate goal of becoming cash flowpositive, the executive management team is being strengthened with theappointment of a managing director and a commercial director who will take uptheir posts in March 2005. Both appointees are expected to join the board ofearthport plc. Prospects As stated in the Trading Update of 25 February 2005, revenues for January were£129,108. February continued the upward trend with revenues of £139,000. The new batchPay product is receiving considerable interest in the market andthe first merchants have contracted for the product. A full trading update will be announced later this month, which sets out theGroup's plans and expectations for the three months to 30 June 2005. CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the period ended 31 December 2004 Unaudited Unaudited Unaudited 6 months 6 months 12 months ended ended ended 31 Dec 2004 31 Dec 2003 30 June 2004 Notes £,000 £,000 £,000 TURNOVER 511 416 926Administrative expenses (2,912) (3,912) (7,780) ------- ------- --------OPERATING LOSS (2,401) (3,496) (6,854)Exceptional income 3 - 1,217 1,217 ------- ------- --------LOSS ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION (2,401) (2,279) (5,637)Interest receivable and similar income - 1 5Interest payable and similar charges (392) (532) (1,004) ------- ------- -------LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (2,793) (2,810) (6,636)Taxation - - - ------- ------- -------LOSS OF ORDINARY ACTIVITES FOR THE PERIOD (2,793) (2,810) (6,636) ------- ------- -------Loss per share - basic & diluted 4 0.5p 0.7p 1.5p ------- ------- ------- CONSOLIDATED BALANCE SHEETat 31 December 2004 Unaudited Unaudited Unaudited 6 months 6 months 12 months ended ended ended 31 Dec 2004 31 Dec 2003 30 June 2004 Notes £,000 £,000 £,000FIXED ASSETSTangible assets 262 884 389 ------- ------- -------- 262 884 389 ------- ------- --------CURRENT ASSETSDebtors 501 565 693Cash at bank and in hand 15 22 23 ------- ------- -------- 516 587 716 CREDITORS: amounts failing within one year (8,646) (6,734) (5,899) ------- ------- --------NET CURRENT LIABILITIES (8,130) (6,147) (5,183) TOTAL ASSETS LESS NET CURRENT LIABILITIES (7,868) (5,263) (4,794) CREDITORS: amounts falling due after more than one year (1,335) (1,302) (1,991) ------- ------- --------NET LIABILITIES (9,203) (6,565) (6,785) ------- ------- -------- CAPITAL AND RESERVESCalled up share capital 22,076 18,101 21,701Share premium account 29,827 29,821 29,827Other reserves 9,200 9,200 9,200Profit and loss account (70,306) (63,687) (67,513) ------- ------- --------SHAREHOLDERS' DEFICIT - EQUITY INTERESTS (9,203) (6,565) (6,785) ------- ------- -------- CONSOLIDATED STATEMENT OF CASH FLOWSfor the period ended 31 December 2004 Unaudited Unaudited Unaudited 6 months 6 months 12 months ended ended ended 31 Dec 2004 31 Dec 2003 30 June 2004 Notes £,000 £,000 £,000 NET CASH OUTFLOW FROM OPERATING ACTIVITIES 5(a) (965) (3,511) (4,807) RETURNS ON INVESTMENTS AND SERVICING OF FINANCEInterest received - 1 5Interest paid (345) (454) (710)Interest element of finance lease rental payments (47) (78) (294) ------- ------- --------NET CASH OUTFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (392) (531) (999) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENTPayment to acquire tangible assets (53) (58) (202) ------- ------- --------NET CASH OUTFLOW BEFORE FINANCING (1,410) (4,100) (6,008) FINANCINGIssue of ordinary share capital 375 4,452 6,856Net movements in borrowings 5(b) 1,027 33 (421)Capital element of finance lease rental payments - (638) (680) ------- ------- --------DECREASE IN CASH DURING THE PERIOD 5(b) (8) (253) (253) ------- ------- -------- NOTES TO THE INTERIM RESULTSfor the period ended 31 December 2004 1. FUNDAMENTAL ACCOUNTING CONCEPT This statement has been prepared on the assumption that the Group is a goingconcern. The Group is engaged in a new and high growth industry where lossesare expected. These losses represent the Group's investment in productdevelopment and roll out to customers and it has remained the directors' policyto ensure that adequate finance is available to support and complete thedevelopment and to sustain delivery to customers. The Group is dependent on the ability to generate additional revenues and freecash flow from sales of its products to both its existing and new customers. Todate the Group has entered into contracts to supply its product and services toan increasing number of customers and is in advanced discussions with many othercustomers. The directors believe that these contracts will generate significantgrowth in revenues, however the timing and value of future sales cannot beguaranteed. Since the balance sheet date, the Group has raised a further £1.75m through theissue of convertible loan notes. The Group has a number of formal and informal arrangements with its creditors todefer significant outstanding payments that are past their due date until suchtime as sufficient funds are available to enable the Group to pay them. TheGroup is reliant upon the continued support of these creditors. The Group is currently concluding further investment funding, which togetherwith the funds raised since the balance sheet date, and the revenues and freecash flows expected to be generated will, the directors believe, be sufficientto meet the Group's working capital requirements. Therefore, the directorsconsider that it is appropriate to prepare the Group's accounts on a goingconcern basis, which assumes that the Group is to continue in operationalexistence for the foreseeable future. If, however, the expected future cashflows do not materialise to the required extent, the Group may need to seek yetfurther finance and if adequate funds cannot be raised as required, it may beforced to consider liquidation or receivership. To this extent there may berenewed uncertainty concerning the Group's ability to continue as a goingconcern. This statement does not include any adjustment that would result should theGroup not generate sufficient revenues, free cash flow or raise additionalfinance through further injections of debt or equity. It is not practical toquantify the adjustments that might be required, but should any adjustments berequired they may be significant. 2. ACCOUNTING POLICIES Basis of preparation The accounts are prepared under the historical cost convention and on the samebasis as the audited accounts for the year ended 30 June 2004. 3. EXCEPTIONAL INCOME The Company's subsidiary, 101010 Limited, is in liquidation. Liabilities forwhich the Company is not responsible were released in the six months to 31December 2003. 4. LOSS PER SHARE The calculation of basic loss per share is based on the loss on ordinaryactivities after taxation, namely £2,793,000 (2003: £2,810,000) and on thenumber of ordinary shares in issue: 565,133,738 at 31 December 2004 (2003:400,170,094). For the purpose of calculating diluted loss per share, outstanding share optionsand convertible loan stock are non-dilutive. 5. NOTES TO THE STATEMENT OF CASH FLOWS (a) Reconciliation of operating loss to net cash outflow from operatingactivities Unaudited Unaudited Unaudited 6 months 6 months 12 months ended ended ended 31 Dec 2004 31 Dec 2003 30 June 2004 Notes £,000 £,000 £,000 Operating loss (2,401) (3,496) (6,854)Depreciation of tangible fixed assets 181 726 1,369Decrease in operating debtors and prepayments 192 100 (250)Increase/(decrease) in operating creditors and accruals 1,063 (841) 928 ------- ------- --------Net cash outflow from operating activities (965) (3,511) (4,807) ------- ------- -------- (b) Reconciliation to net debt Decrease in cash during the period (8) (253) (253)Cash (inflow) outflow from (increase)/ reduction in debt and lease (1,027) 605 1,101financingWriteback of loan - 1,217 1,217Debt satisfied by the issue of equity - - 90 ------- ------- ------- Movement in the period (1,035) 1,569 2,155Net debt at beginning of period (3,971) (6,126) (6,126) ------- ------- ------- Net debt at end of period (5,006) (4,557) (3,971) ------- ------- ------- 6. PUBLICATION OF NON-STATUTORY ACCOUNTS The results for the six months ended 31 December 2004 and 2003 are unaudited andunreviewed by the auditors. The results for the year ended 30 June 2004 do notconstitute statutory accounts as defined in section 240 of the Companies Act1985, but have been derived from the full audited financial statements for theyear ended 30 June 2004. The report of the auditors on the financial statementsfor the year ended 30 June 2004 included a disclaimer of opinion paragraph onthe basis of going concern. This information is provided by RNS The company news service from the London Stock Exchange