RNS Number:6938J
Glow Communications PLC
07 April 2003
7 April 2003
GLOW COMMUNICATIONS PLC
RESULTS FOR THE YEAR ENDED
30 NOVEMBER 2002
Glow Communications plc ("Glow"), the AIM-listed marketing affinity and data
storage company, today announces preliminary results for the year ended 30
November 2002.
Highlights:
* Turnover increased by 64% to #8.3m (2001: #5.1m) Excluding Primary
Networks, disposed of in 2001, like for like turnover increased 98%
* Glow Telecom:
- Continued success in winning new affinity marketing deals
- Significant increase in active customers
- Rise in Average Revenue Per User (ARPU)
* Primary Storage:
- Revolutionary Mac product launched
* New advisers appointed
Derek Griffiths, Chairman, commented: "The substantial progress made during the
last twelve months is only partially reflected in these results. Our principal
subsidiary, Glow Telecom, has enjoyed considerable success in terms of customer
acquisition and increasing the revenue derived from them. During the year we
have invested strongly in infrastructure and technology which has not only
enabled us to maintain one of the lowest churn rates in the industry but has
also given us the capability to service several million customers without
compromising the quality of our offering.
"Our data storage subsidiary, Primary Storage, continues to trade in line with
expectations, and following the well-received launch of its latest Mac product,
the company's prospects look more encouraging than they have done for some time.
"Overall, we will continue to explore growth opportunities where they will add
significant value to our shareholders and we remain confident of the company's
prospects going forward."
For further information, please contact:
Derek Griffiths, Chairman Justin Griffiths
Terry Boland, Chief Executive John West
Glow Communications plc Tavistock Communications Ltd
Tel: 020 7600 2288 Tel: 020 7600 2288
CHAIRMAN'S STATEMENT
Overview
The substantial progress made during the last twelve months is only partially
reflected in the results for the year ended 30 November 2002. Turnover for
telecoms alone increased from #231,411 to #4,646,070, with most of this growth
occurring during the second half of the year, and most importantly, was achieved
with a minimal increase in overhead. The continuing monthly growth in organic
sales, combined with the established tight control of the cost base, will enable
the group to achieve positive returns in the very near future.
Throughout 2002, Glow Telecom, now clearly the principal subsidiary, continued
to develop its affinity partnerships, enabling it to increase the customer base
without the need for costly marketing expenditure. The company now has a large
number of blue-chip affinity programmes, generating regular growth in new
business with total active customer accounts at the date of this report in
excess of 26,000.
Operational review
During the year, Glow Telecom completed the development and implementation of
the second phase of its ground-breaking web-based call centre and Management
Information System (MIS) solution. The modules, now released, include Customer
Relationship Management (CRM), Customer Registration, Management Information,
Credit Card Clearing, Bill Rating and Sales Ledger, which are now fully
integrated with one another. This accurate and informative billing platform can
now combine all current and future products on one invoice, if required.
In addition, Glow Telecom has fully automated Carrier Pre Selection (CPS) - the
provisioning system for the transfer of customers from BT (or other carriers) to
our chosen network, entirely eliminating the costly need for engineers or
auto-diallers and completely negating the need for customers to dial prefix
codes.
The new automated CPS process used in conjunction with Glow Telecom's online
registration system means that customers can utilise and receive Glow Telecom
products within 10 minutes of registering.
All these systems, including our state-of-the-art management information system,
have been developed in-house by our own software team and are totally scalable,
ensuring that Glow Telecom can easily cope with a significant increase in the
customer base. All systems are web-based and can be accessed according to
security levels from any location.
New affinity partners can be up and running within 7 days, with their own
bespoke on-line registration system, supported by our highly trained team, which
excels in customer care and sales.
Inbound sales conversions remain consistently above 90% every week, whilst
outbound cold call sales conversions achieve over 16%. Telecom churn has been
maintained at less that 1% per month, well below the industry average, even with
the continued significant increases in revenues.
The acquisition and integration of certain contracts acquired from the
administrator of Future Integrated Telecom (FIT) were completed successfully
during the year.
With respect to business operations, Glow Telecom has seen a rise in average
revenue per user (ARPU) during the year to #51.73 per month for business
customers and #11.58 per month for residential customers, together with an
extremely satisfactory growth in overall customer numbers relating to ongoing
and new affinity partnerships and the aforementioned acquisition of certain
contracts from the administrator of FIT. Total registered active accounts for
the year ended 30 November 2002 amounted to 21,216, an increase of 788%.
It is worth noting that the impressive growth in customer numbers has been
achieved without any substantial increase in staffing levels, thereby enabling
us to keep any increases in overheads to a minimum.
Affinity marketing
During the year under review, Glow Telecom has continued to enjoy considerable
success in signing up new affinity partners. These new partners give us the
opportunity to market effectively our products and services to a significant
number of potential customers whilst at the same time complementing our
partners' own value-added propositions.
During the period, Glow Telecom signed major deals with SAS, the fifth largest
airline in Europe and Britannia Music, Europe's largest mail order supplier of
compact discs, videos and DVDs. Last year, Glow Telecom also reached an
agreement with the Federation of Small Businesses (FSB) to market Glow Telecom's
voice, data and mobile services, which is already generating higher rates of
ARPU and will ensure that FSB members see Glow Telecom as a one stop shop for
all their communications needs.
In addition, Glow Telecom has also launched a number of other major affinity
marketing programs with several organizations including, one of the UK's largest
house builders, one of the UK's leading home shopping companies JD Williams,
book club Quality Paperbacks Direct and veterinary charity People's Dispensary
for Sick Animals, to provide a range of low-cost telecommunication services.
We are also pleased to announce a sponsorship deal with Jensen Button, one of
Formula One's most exciting drivers, to promote a range of our integrated
telecommunication services.
Product development
Glow Telecom
In November 2002, Glow Telecom launched its corporate mobile service, which
to-date is making satisfactory progress. Additionally, in January 2003, Glow
Telecom added broadband access to its product portfolio, which will give
customers high-speed low-cost access to the internet with an 'always on'
facility enabling simultaneous internet and telephone access.
Primary Storage
In December, Primary Storage, our data storage subsidiary, launched a new
proprietary Mac product called the Max, which is set to revolutionise the way
companies can interface not only their Mac computers but also uniquely network
in standard PCs as well.
Companies using Macs seldom have servers; peer-to-peer networks being the Mac
way. The Primary Max offers fast and reliable storage and access across the
network at value-for-money PC pricing.
The "Max" received MacWorld's highest accolade (Jan 2003).
Financial results
Turnover during the year was #8,349,745 (2001: #5,077,337). On a like for like
basis, turnover for 2001, excluding the Primary Networks division, which was
disposed of in 2001, was #4,216,968 - making an increase for 2002 of 98%.
Operating losses were #4,147,706, (2001: #3,674,112). Pre-tax losses for the
year were #4,132,161 (2001: 3,526,689). The operating loss before exceptional
items was #3,511,386 (2001: #3,674,112). The loss per share was 0.84 pence
(2001: loss: 0.74 pence).
In addition to the #5 million equity credit line from Gem Investment Advisors,
Inc. (GEMIA), and in-line with our current business objectives, the Group has
agreed a new Business Finance Facility for #3 million with NMB Heller, ensuring
that the company can fulfil its commercial objectives for 2003.
Dividend
The Directors do not propose the payment of a dividend on the ordinary shares
but instead intend to retain cash for use within the business.
Advisers
We are also pleased to announce the appointment of Grant Thornton as our new
nominated advisers and Durlacher as our broker, replacing Arbuthnot Securities
Limited, previously Old Mutual Securities. Both Grant Thornton and Durlacher
are recognised specialists in the Smaller Cap arena and we firmly believe that
they will be able to contribute significantly to the fulfilment of our corporate
ambitions. We look forward to working with them and would like to thank
Arbuthnot for their support over the past few years.
Outlook
The prospects for the Group are very exciting and we have made significant
progress since the announcement of our results for the six months ended 31 May
2002.
Telecom income is an ever-growing contributor to our total revenue and in the
last quarter alone accounted for some 64% of Group turnover. The active
customer base has continued to grow by an average of 6% per month since the year
end. Customer acquisition remains strong. ARPU is on the increase,
particularly as we continue to have one of the industry's lowest churn rates.
This is particularly pleasing in that, despite the fact we have only increased
our overheads marginally, we are still recognised as an industry leader in
customer service. Glow Telecom has invested strongly in technology and
infrastructure and now has the capability to effectively service several million
customers whilst maintaining quality of service.
In fact, with the continued strong growth, increased margins, growing ARPU and
low churn, we expect Glow Telecom will start to make a positive contribution
later in 2003.
Primary Storage's prospects, with the launch of the new Mac product (Max) look
more encouraging than they have for some time and the company continues to trade
in line with expectations.
We will continue our focus on customer acquisition and first-rate service and
are committed to exploring further growth opportunities, where they can add
significant shareholder value.
I would finally like to thank all our staff for the tremendous amount of hard
work and commitment given over the past year.
Derek Griffiths
Chairman
GLOW COMMUNICATIONS PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 30 November 2002
Note 2002 2001
# #
Turnover 8,349,745 5,077,337
Exceptional cost of sales 4 (425,906) -
Other cost of sales (6,899,877) (4,109,237)
Cost of sales (7,325,783) (4,109,237)
Gross profit 1,023,962 968,100
Distribution expenses (730,616) (772,883)
Exceptional administrative expenses 4 (210,414) -
Other administrative expenses (4,230,638) (3,869,329)
Operating loss (4,147,706) (3,674,112)
Interest receivable 20,970 155,230
Interest payable and similar charges (5,425) (7,807)
Loss on ordinary activities before taxation (4,132,161) (3,526,689)
Tax on loss on ordinary activities (37,211) -
Loss for the financial year (4,169,372) (3,526,689)
Loss per share 5 (0.84p) (0.74p)
There were no recognised gains or losses other than the loss for the financial
year.
GLOW COMMUNICATIONS PLC
CONSOLIDATED BALANCE SHEET
At 30 November 2002
Note 2002 2001
# #
Fixed assets
Goodwill 2,573,509 2,507,541
Tangible assets 570,484 602,746
3,143,993 3,110,287
Current assets
Stocks 469,683 1,016,448
Debtors 2,352,284 1,225,699
Cash at bank and in hand - 1,920,658
2,821,967 4,162,805
Creditors: amounts falling due within one year (3,724,122) (1,262,539)
Net current (liabilities)/assets (902,155) 2,900,266
Total assets less current liabilities 2,241,838 6,010,553
Creditors: amounts falling due after more than one year - (24,521)
Net assets 2,241,838 5,986,032
Capital and reserves
Called up share capital 8,316,987 7,991,215
Share premium account 7,001,615 6,902,209
Merger reserve 1,400,000 1,400,000
Profit and loss account (14,476,764) (10,307,392)
Shareholders' funds 6 2,241,838 5,986,032
Shareholders' funds may be analysed as:
Equity interests (980,945) 2,763,249
Non-equity interests 3,222,783 3,222,783
2,241,838 5,986,032
GLOW COMMUNICATIONS PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 November 2002
Note 2002 2001
# #
Net cash outflow from operating activities 7 (2,178,192) (3,476,203)
Returns on investments and servicing of finance
Interest received 20,970 155,230
Interest paid (5,425) (6,077)
Interest element of financial lease rental payment - (1,730)
Net cash inflow from returns on investments and servicing of finance 15,545 147,423
Taxation (3,224) -
Capital expenditure and financial investment
Purchase of tangible fixed assets (169,927) (310,840)
Purchase of intangible fixed asset (381,000) -
Sale of tangible fixed assets 8,598 25,284
Net cash outflow from capital expenditure and financial investment (542,329) (285,556)
Net cash outflow before financing (2,708,200) (3,614,336)
Financing
Repayment of secured loan (26,750) (26,749)
Capital element of finance lease rental payments - (12,805)
Issue of shares 456,078 -
Expenses paid in connection with share issue (30,900) -
Net cash inflow/(outflow) from financing 398,428 (39,554)
Decrease in cash 8 (2,309,772) (3,653,890)
Notes to the announcement of results:
1. BASIS OF PREPARATION
The financial statements have been prepared under the historical cost
convention, in accordance with applicable accounting standards
The principal accounting policies of the group are set out in the group's 2001
annual report and financial statements. The policies have remained unchanged
from the previous annual report, except for the adoption of Financial Reporting
Standard 19 "Deferred Taxation" which has no impact on the results of the group.
2. PUBLICATION OF NON-STATUTORY ACCOUNTS
The financial information for the years ended 30 November 2002 and 30 November
2001 does not constitute statutory accounts within the meaning of section 240 of
the Companies Act 1985 and has been extracted from the full accounts for the
years ended 30 November 2002 and 30 November 2001 respectively. The reports of
the auditors on those accounts were unqualified. Statutory accounts for the
year ended 30 November 2002 will be delivered to the Registrar of Companies and
sent to shareholders shortly.
3. REPORT AND ACCOUNTS
Copies of this announcement are available from www.glowtelecom.com or from the
registered company address at Glow Communications plc, Unit 9, Hortonwood 7,
Telford, Shrops, TF1 7YY.
4. EXCEPTIONAL COSTS
The exceptional cost of sale in 2002 relates to a one-off stock provision made
against a specific product line unlikely to be utilised. The exceptional
administrative expenses relate to costs incurred as a result of the acquisition
of certain contracts of Future Integrated Telephony plc.
5. EARNINGS PER SHARE
The calculation of the loss per share is based on Group loss for the year
attributable to ordinary shareholders of #4,169,372 (2001: #3,526,689) divided
by the weighted average number of ordinary shares in issue. The weighted
average number of ordinary shares in issue was 496,568,066 (2001: 476,843,281).
The impact of the share options does not dilute the loss per share.
6. Reconciliation of movements in shareholders' funds
2002 2001
# #
Loss for the financial year and net decrease in shareholders' funds (4,169,372) (3,526,689)
Proceeds of ordinary share issue 425,178 -
Shareholders' funds at 1 December 2001 5,986,032 9,512,721
Shareholders' funds at 30 November 2002 2,241,838 5,986,032
7. Net cash outflow from operating activities
2002 2001
# #
Operating loss (4,147,706) (3,674,112)
Depreciation 198,509 223,148
Profit on sale of tangible fixed assets (4,918) (10,800)
Amortisation of goodwill 315,032 288,780
Decrease/(increase) in stocks 546,765 (457,176)
(Increase)/decrease in debtors (1,160,572) 312,939
Increase/(decrease) in creditors 2,074,698 (158,982)
Net cash outflow from operating activities (2,178,192) (3,476,203)
8. Reconciliation of net cash flow to movement in net funds/(debt)
2002 2001
# #
Decrease in cash in the year (2,309,772) (3,653,890)
Cash outflow from decrease in debt and lease financing 26,750 39,554
Changes in net funds in the year (2,283,022) (3,614,336)
Net funds at 1 December 2001 1,869,387 5,483,723
Net debt at 30 November 2002 (413,635) 1,869,387
This information is provided by RNS
The company news service from the London Stock Exchange
END
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