RNS Number:0374K
Vanco PLC
15 April 2003
Vanco
Preliminary Results
For the year ended 31 January 2003
FINANCIAL HIGHLIGHTS
2003 2002
#m #m
TURNOVER
Continuing operations 53.0 37.1
Discontinued operations 0.0 0.0
_________ _________
53.0 37.1
========= =========
OPERATING PROFIT (LOSS)
Continuing operations 1.1 3.1
Discontinued operations (0.1) (0.2)
_________ _________
1.0 2.9
========= =========
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 0.4 2.6
========= =========
NET ASSETS AT YEAR END 11.0 10.3
========= =========
CASH IN HAND AT YEAR END 5.6 5.8
========= =========
NET DEBT AT YEAR END 8.3 2.0
========= =========
CONTRACTED REVENUE AT YEAR END 132.0 68.3
========= =========
BASIC (LOSSES) EARNINGS PER ORDINARY SHARE (0.3) 3.5
(PENCE)
========= =========
DILUTED (LOSSES) EARNINGS PER ORDINARY SHARE (0.3) 3.4
(PENCE)
========= =========
VANCO ANNOUNCES YEAR END RESULTS
Vanco plc ("Vanco"), the Global Virtual Network Operator, today announces its
preliminary results for the year ended 31 January 2003.
Key points are as follows
* Turnover up 43.0% to #53.0 million (2002- #37.1 million);
* Operating profit of #1.1 million (2002- #3.1 million) which is in line
with expectations. Return to strong profitability in the second half of the
financial year. This reflects the end of the investment phase which was
explained when Vanco floated;
* Operating profit for the six months to 31 January 2003 of #2.6 million
(2002- #2.5 million). This compares to a loss of #1.5 million for the six
months to 31 July 2002;
* Contracted revenue up 93.3% to #132.0 million at 31 January 2003 (2002-
#68.3 million);
* Cash balance of #5.6 million (2002- #5.8million);
* Net debt of #8.3 million (2002- #2.0 million);
* Gross margin of 35.2% (2002- 35.4%); and
* Customers in 65 countries globally (2002 - 39 countries).
Commenting on the results, Allen Timpany, the Chief Executive said:
"At the time of our flotation we set out very specific plans for the development
of our business and international operations. I am delighted to report that
these plans are on track and already delivering results. We believe that it
demonstrates that Vanco's approach to delivering the network solutions needed by
multinational clients is the right one in a mature deregulated telecoms market."
For further information please contact:
Vanco plc
Allen Timpany, Chief Executive Officer Tel +44 208 636 1700
Simon Hargreaves, Finance Director Tel +44 208 636 1700
Andrew Brown, Public Relations Manager Tel +44 208 636 1700
FULL PRELIMINARY ANNOUNCEMENT FOLLOWS
Introduction
I am pleased to report that Vanco has made excellent progress in its first full
year on the Official List of the London Stock Exchange. We have exceeded market
expectations in both profit and turnover and continued our 15 year record of
uninterrupted growth in revenue whilst continuing to make operating profits. We
believe this demonstrates why Vanco's strategy of focusing on customer solutions
and service, without being encumbered by the ownership of telecommunications
infrastructure, continues to be the correct one. This approach has resulted in
us continuing to attract large domestic and international corporate customers at
the expense of our infrastructure based competitors.
Summary of Vanco's business
Vanco is a Global Virtual Network Operator (GVNO). Vanco provides the design,
implementation, operation, security and management of business critical
corporate data networks. World leading organisations rely upon Vanco for their
network communications, including Ford, Avis, Pilkington, Virgin Retail, Accor
and Tenovis.
Vanco is virtual in the sense that it does not build or own the
telecomunications infrastructure and assets underlying its customers' networks.
The right to use the infrastructure is purchased from the most suitable
telecommunications carrier to meet our customers' network requirements anywhere
in the world.
The virtual concept conveys a number of benefits to the end-user:
* The greatest in-depth global network coverage. We now have the capability
to provide our services in 230 countries and territories;
* Flexibility to select from all the available carriers and technologies;
* Freedom to adapt the solution to meet changing customer priorities within
the contract;
* An ongoing flexibility to incorporate the lowest cost solutions; and
* Vanco's core business is delivering the highest quality customer service,
without the need to deploy and manage basic telecommunications
infrastructure.
Market development and customer priorities
IT departments are facing intense pressure. They are increasingly being asked to
deliver more time critical applications over their existing networks and systems
to an increasing number of staff, suppliers and customers. This places great
pressure on the existing network and systems. When coupled with a continuing
end-user focus on cost optimisation, the opportunities for the Vanco approach
are significant.
In the carrier marketplace consolidation has continued with many telecoms
operators being reduced to domestic and regional players. The desire of carriers
to maximise both the traffic through their infrastructure and revenues has often
resulted in customers being locked into sub-optimal network management
contracts, both technologically and financially, with declining levels of
service.
Being independent of any of the carriers, Vanco is able to focus on designing
network solutions which not only utilise the most appropriate technologies but
which also only use the bandwidth the customer requires to deliver their
business critical applications. Through our knowledge of the available carriers
and technologies, and a high quality service culture, Vanco achieves the
customers' objective of delivering a solution at the best cost-to-quality ratio.
The strength of Vanco as a network solution provider is demonstrated by the
decision of a number of global IT outsourcing companies to bid Vanco solutions
in the year ended 31 January 2003, one of which has already resulted in a
significant contract. In this situation the IT outsourcer has put forward a
Vanco solution for the network component of the larger IT outsourcing contract.
This represents a new route to market for Vanco's services.
Financial information
In the year ended 31 January 2003, turnover amounted to #53.0 million which
represents an increase of 43.0% over the previous year.
Operating profit on continuing activities amounted to #1.1 million down from the
#3.1 million achieved in the previous year. This is in line with information
provided at the time of flotation, and results from the execution of the planned
expansion of our global network service operations.
Basic losses per share were 0.3p (2002- earnings per share 3.5p) and diluted
losses per share were 0.3p (2002- earnings per share 3.4p). The losses per share
have arisen as a result of a disproportionately high tax charge due to a timing
difference on the ability to relieve losses in non- UK companies.
Cash generated from operating activities was #1.6 million which demonstrates
that the business model continues to be intrinsically self-funding. As at 31
January 2003 our cash balances amounted to some #5.6 million and net debt was
#8.3 million. The value of our future contracted revenue at 31 January 2003 was
up 93.3% to #132.0 million (2002- #68.3 million), of which some #43.0 million
will be recognised in the year ending 31 January 2004 (2003- #25.8 million).
New contracts won
Many major organisations have selected Vanco to design, implement and manage
their business critical networks over the last 12 months. These include Avis
Europe, who contracted Vanco to design and manage a 1,000 site solution across
14 countries and Pilkington, one of the world's largest manufacturers of glazing
products, who also selected Vanco to design, implement and manage its network of
266 sites covering 21 countries globally.
It is especially pleasing that all the new international offices are trading
ahead of expectations, with eight customers in France, two of which are members
of the CAC40 including a major contract with Accor, five in Italy, and two in
Singapore. Additionally, Vanco has deployed over 100 sites for Pilkington in the
USA. The investment phase of the international expansion has been executed
successfully both on time and on budget and strong results are now being
achieved from this.
Vanco also has an excellent track record in retaining its existing customers.
One example is the recent five year contract extension signed with British Car
Auctions, who were Vanco's first customer, signing their original contract in
1989. Another route of increased expansion is the additional work from larger
existing customers. An example of this is the relationship with Ford, where
Vanco has been certified by Ford be the sole provider their 3rd Generation VPN
(3GX VPN) Management Service. This new strategic solution will be available to
all dealers and suppliers across Europe. The Ford brands also include Volvo,
Jaguar, Land Rover, Mazda and Aston Martin.
Development of global customer service and sales operations
At the time of the company flotation in November 2001 and in our results
statement last year we made commitments to invest in our global customer service
operations.
In the year ended 31 January 2003 we have delivered upon these commitments. This
included investment in our network management facilities in the UK, USA,
Singapore, Italy and France. In addition, Vanco has recently opened an office in
Sydney to support existing orders for in excess of 100 sites. We have launched
O-zone, one of the industry's most advanced on-line service provision system. We
are rolling out v:spond, a real-time customer service call handling system to UK
customers. Investment has also been made in our global supplier relations team,
enabling us to offer services to customers in 230 countries and territories.
This investment is paying dividends. In an independent pan-European research
study conducted by ICM among senior IT decision makers from Europe's largest
companies, Vanco was rated as the leading provider in the network industry for
customer satisfaction.
The study also revealed that in terms of awareness, Vanco is the 8th leading
brand in the network outsourcing services market, equal with Infonet and that we
are the leading non-carrier brand, ahead of companies such as IBM and EDS. This
reflects the continuing success of our very targeted and well-established direct
marketing strategy.
The group has made a substantial financial and time investment in processes and
systems to support future growth.
Development of global customer service and sales operations (continued)
Finally, customer service depends heavily on recruiting, training and motivating
high quality staff. Again, unlike many of our competitors, Vanco has increased
its staff numbers by 30.2%, with the majority in customer facing roles.
Recognising the drive and diversity of our staff, we have launched v:choice, a
unique programme of flexible benefits. We believe this is the first flexible
benefits scheme to be launched on a global basis.
Current trading and future prospects
The decision to enhance our international presence, at a time when most
competitors were scaling back and retrenching into core markets, places Vanco in
a very strong position. Global customers now, more than ever, require
international network operations, and as our revenue growth suggests are
increasingly viewing Vanco as the provider most capable of doing this for them.
A track record of consistent growth in revenue, profitability and high quality
service, combined with the considerable market opportunity gives us the
confidence that we can achieve the market's financial expectations in the year
ahead.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
YEAR ENDED 31 JANUARY 2003
Note 2003 2002
# #
TURNOVER
Continuing operations 52,993,656 37,066,107
Discontinued operations - 29,220
____________ ____________
3 52,993,656 37,095,327
Cost of sales (34,350,951) (23,993,555)
____________ ____________
Gross profit 18,642,705 13,101,772
Administrative expenses (17,664,096) (10,198,191)
____________ ____________
OPERATING PROFIT (LOSS)
Continuing operations 1,103,212 3,102,705
Discontinued operations (124,603) (199,124)
____________ ____________
978,609 2,903,581
Interest receivable and similar income 573,788 245,999
Interest payable and similar charges (1,129,732) (591,193)
____________ ____________
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 422,665 2,558,387
Tax on profit on ordinary activities (551,469) (816,214)
(LOSS) PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION (128,804) 1,742,173
Equity minority interests - (23,781)
Non-equity minority interests - (236,003)
____________ ____________
(LOSS) PROFIT FOR THE FINANCIAL YEAR (128,804) 1,482,389
Equity dividends 4 - (519,731)
____________ ____________
RETAINED (LOSS) PROFIT FOR THE YEAR 1,2 (128,804) 962,658
============ ============
Basic (loss) earnings per ordinary share (pence) 5 (0.25) 3.46
============ ============
Diluted (loss) earnings per ordinary share (pence) 5 (0.25) 3.41
============ ============
Adjusted diluted (loss) earnings per ordinary share (pence) 5 (0.25) 2.92
============ ============
CONSOLIDATED BALANCE SHEET
31 JANUARY 2003
2003 Restated
# 2002
Note #
FIXED ASSETS
Intangible assets 4,420,575 4,214,035
Tangible assets 11,881,617 7,292,851
___________ ___________
16,302,192 11,506,886
CURRENT ASSETS
Stock of components 17,572 23,870
Debtors
Due within one year 21,426,227 14,994,671
Due after more than one year 9,517,502 6,886,667
Investments 234,057 248,732
Cash at bank and in hand 5,569,472 5,800,561
___________ ___________
36,764,830 27,954,501
CREDITORS: amounts falling due
within one year
Trade creditors 12,603,319 9,734,159
Other creditors 6,238,541 4,263,888
___________ ___________
18,841,860 13,998,047
___________ ___________
NET CURRENT ASSETS 17,922,970 13,956,454
___________ ___________
TOTAL ASSETS LESS CURRENT LIABILITIES 34,225,162 25,463,340
CREDITORS: amounts falling due after more (9,792,466) (5,016,795)
than one year
PROVISIONS FOR LIABILITIES AND CHARGES (409,193) (222,856)
___________ ___________
24,023,503 20,223,689
=========== ===========
ACCRUALS AND DEFERRED INCOME 10,844,112 7,357,127
CAPITAL AND RESERVES
Called up share capital 2,633,802 2,598,467
Share premium account 1 7,778,140 7,099,697
Profit and loss account 1 568,132 613,255
___________ ___________
EQUITY SHAREHOLDERS' FUNDS 2 10,980,074 10,311,419
MINORITY INTERESTS
Non-equity 2,199,317 2,555,143
___________ ___________
24,023,503 20,223,689
=========== ===========
CONSOLIDATED CASH FLOW STATEMENT
YEAR ENDED 31 JANUARY 2003
2003 2002
Note # #
Net cash inflow from operating activities 7 1,591,368 1,750,448
Returns on investments and servicing of finance
Interest received 14,937 48,037
Interest paid (701,324) (358,216)
Dividend paid to minority interests - (236,003)
__________ __________
Net cash outflow from returns on investments and servicing of finance (686,387) (546,182)
__________ __________
Taxation paid (376,272) (413,020)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (1,644,451) (635,013)
Payments to acquire intangible fixed assets (13,871) (40,807)
Receipts from sales of tangible fixed assets - 130,415
___________ __________
Net cash outflow from capital expenditure and financial investment (1,658,322) (545,405)
___________ __________
Acquisitions
Investment in subsidiary undertaking (130,925) (121,337)
Investment in own shares by Employee Benefit (45,326) -
Trust
___________ __________
Net cash outflow from acquisitions (176,251) (121,337)
___________ __________
Equity dividends paid - (519,731)
___________ __________
Net cash outflow before financing (1,305,864) (395,227)
Financing
Redemption of shares from non-equity minorities - (94,185)
Issue of shares to non-equity minorities - 1,737,663
Issue of ordinary share capital - 4,298,254
Capital element of finance lease payments (2,292,504) (1,924,799)
New medium term loans 2,895,080 2,000,000
New loans 884,639 201,205
Capital element of loan repayments (159,304) (64,384)
Medium term loan repayments (383,401) (419,700)
___________ __________
Net cash inflow from financing 944,510 5,734,054
___________ __________
___________ __________
(Decrease) increase in cash in the year 8 (361,354) 5,338,827
=========== ==========
NOTES TO THE ACCOUNTS
YEAR ENDED 31 JANUARY 2002
1. STATEMENT OF MOVEMENTS ON RESERVES
Profit and Share premium
loss account Total
account # #
#
At 1 February 2002 613,255 7,099,697 7,712,952
Retained loss for the year (128,804) - (128,804)
Foreign currency translation differences 83,681 - 83,681
Share premium arising on issue of new ordinary shares - 678,443 678,443
_________ _________ _________
At 31 January 2003 568,132 7,778,140 8,346,272
========= ========= =========
2. STATEMENT OF MOVEMENTS IN SHAREHOLDERS' FUNDS
2003 2002
# #
(Loss) profit for the financial year (128,804) 1,482,389
Dividends - (519,731)
___________ ___________
(128,804) 962,658
Purchase of shares from non-equity minority - (90,049)
Foreign currency translation differences 83,681 (16,641)
Issue of new ordinary shares 713,778 9,546,137
Cost of issuing new shares on listing - (1,658,975)
___________ ___________
Net increase in shareholders' funds 668,655 8,743,130
Opening shareholder's funds 10,311,419 1,568,289
___________ ___________
Closing shareholders' funds 10,980,074 10,311,419
=========== ===========
3. TURNOVER
All turnover is derived from telecommunication services. The geographical
analysis of turnover is as follows:
2003 2002
# #
United Kingdom 41,349,421 29,787,446
Other European countries 11,518,804 7,307,881
Other 125,431 -
___________ ___________
52,993,656 37,095,327
=========== ===========
The above analysis is based on the country in which invoices are raised. Due to
the nature of the Packaged Network Solutions provided by the Group, it is
difficult to accurately split turnover according to the location in which the
service is provided. However in the opinion of the Directors, of the total
turnover for the year ended 31 January 2003, approximately #23.3 million (2002-
#14.5 million) relates to services provided outside the United Kingdom.
4. DIVIDENDS
2003 2002
# #
Equity dividends - paid #nil per share (2002 - #47.24) - 519,731
======= ========
5. (LOSS) EARNINGS PER SHARE
Earnings per ordinary share have been calculated by dividing the (loss) profit
after taxation, minority interests and non-equity share dividends for each year
by the weighted average number of ordinary shares of the Company during the
year. The diluted weighted average number of ordinary shares has been calculated
after taking into account the effect of the vesting of shares issued to certain
employees of the Group which are due to vest providing only that the employees
concerned are still employed by the Group at the due date for vesting.
The weighted average number of ordinary shares and the diluted weighted average
number of ordinary shares used in the calculations are as follows:
2003 2002
Number Number
Weighted average number of ordinary shares 52,017,147 42,840,570
========== ==========
Diluted weighted average number of ordinary shares 53,994,800 43,468,817
========== ==========
Adjusted diluted weighted average number of ordinary shares has been calculated
after taking into account the dilutive effect of the conversion of deferred
ordinary shares in Vanco Group Limited into ordinary shares of 5p each in Vanco
plc. At 31 January 2003, none of the targets regarding the contingently issuable
shares to Directors and senior executives had been met. Accordingly, these
shares are not dilutive for the purposes of calculating earnings per share. This
additional disclosure has been provided in order to demonstrate the potential
impact of the share conversion referred to above. The adjusted diluted weighted
average number of ordinary shares used in the calculation is as follows:
2003 2002
Number Number
Weighted average number of ordinary shares 52,017,147 42,840,570
Dilutive shares 6,535,589 7,887,286
__________ __________
Adjusted diluted weighted average number of ordinary shares 58,552,736 50,727,856
========== ==========
The (loss) profit for the financial year used in the calculation is as follows:
2003 2002
# #
(Loss) profit on ordinary activities after taxation (128,804) 1,742,173
Less: non-equity dividends and other appropriations - (259,784)
_________ _________
(Loss) earnings attributable to ordinary shareholders (128,804) 1,482,389
+======== =========
6. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
2003 2002
# #
(Decrease) increase in cash in the year (361,354) 5,338,827
Cash outflow from changes in lease and hire purchase 2,292,504 1,924,799
financing
New loans (3,779,719) (2,201,205)
Cash outflow from loan repayments 542,705 484,084
___________ ___________
(1,305,864) 5,546,505
New finance leases (5,116,182) (2,569,468)
Foreign currency translation differences 103,330 6,094
___________ ___________
Movement in net debt (6,318,716) 2,983,131
Opening net debt (2,019,826) (5,002,957)
___________ ___________
Closing net debt (8,338,542) (2,019,826)
=========== ===========
7. RECONCILIATION OF OPERATING PROFIT TO NET CASH INFLOWS FROM OPERATING
ACTIVITIES
2003 2002
# #
Operating profit 978,609 2,903,581
Depreciation 2,478,300 2,450,598
Profit on disposal of fixed assets - (9,789)
Amortisation of intangible fixed assets 296,370 195,911
Decrease in stock 6,298 18,949
Increase in debtors (8,784,165) (6,472,140)
Increase in creditors 3,068,966 1,898,644
Increase in accruals and deferred income 3,486,990 863,426
Decrease (increase) in other non-cash items 60,000 (98,732)
_________ _________
Net cash inflow from operating activities 1,591,368 1,750,448
========= =========
8. ANALYSIS OF NET DEBT
31 January Cash flow Exchange Other 31 January
2002 Movements Movements 2003
# # # # #
Cash at bank and in hand 5,800,561 (361,354) 130,265 - 5,569,472
Bank loans due in less than one year (504,722) 383,401 - (382,569) (503,890)
due in more than one year (1,537,489) (2,895,080) - 382,569 (4,050,000)
Loans due in less than one year (117,520) 159,304 - (373,845) (332,061)
due in more than one year (207,634) (884,639) - 373,845 (718,428)
Finance leases and hire purchase agreements (5,453,022) 2,292,504 (26,935) (5,116,182) (8,303,635)
___________ ___________ __________ __________ ___________
(2,019,826) (1,305,864) 103,330 (5,116,182) (8,338,542)
=========== =========== ========== ========== ===========
9. RESTATEMENT
Certain comparative information has been restated to reflect consistent
presentation with the current year. This relates to the presentation of
accruals and deferred income in the balance sheet.
10. STATUS OF AUDIT
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 31 January 2003 or 31 January
2002. The financial information for the year ended 31 January 2002 is derived
from the statutory accounts for that year which have been delivered to the
Registrar of Companies. The auditors reported on those accounts; their report
was unqualified and did not contain a statement under s237(2) or (3) Companies
Act 1985. The statutory accounts for the year ended 31 January 2003 will be
finalised on the basis of the financial information presented by the directors
in the preliminary announcement and will be delivered to the Registrar of
Companies following the company's Annual General Meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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