Intec Telecom Systems PLC (“Intec” or “the Company”), the world’s leading provider of third party packaged interconnect billing and settlement software, today announces its unaudited results for the nine months to 30 June 2000, and its first reporting quarter as a listed company. The Company is pleased to report revenues and earnings in line with the Directors’ expectations.
HIGHLIGHTS
- Revenues for nine months to 30 June 2000 increased by 178% to £12.163m (nine months ended 30 June 1999: £4.379m)
- Earnings before interest, tax, depreciation, amortisation and exceptional flotation expenses (“EBITDA”) increased significantly to £2.053m (nine months ended 30 June 1999: loss of £1.406m)
- Profit before tax and exceptional flotation expenses (£0.499m) increased to £1.691m compared to a loss of £1.693m for the nine months ended 30 June 1999
- Four new contract wins, in Greece, Hungary, Holland and the Caribbean (new markets for Intec.)
- Global expansion continues as planned, with operations developing successfully in Eastern Europe, South America and Asia-Pacific
- Strong order book and prospect list
Chairman’s Statement, Intec Telecom Systems PLC – 3rd Quarter Results
In our first Quarterly reporting period as a listed company, I am very pleased to be able to report that the growth and financial performance of Intec continues to meet our expectations. Revenues and earnings have shown substantial growth, and we have been able to deliver results that underline the fundamental strength and long term opportunities of our business.
In the nine months to June 30th 2000, revenues were £12.163 million, an increase of 178% on the same period in 1999, underlining the dramatic growth in the company. Revenues have been derived from new software licences for our market-leading InterconnecT product family (55% of turnover); from recurring revenues attributable to both upgrades within volume-based pricing model and from support contracts (including our innovative Application Service Provision (ASP) product) (25% of turnover); and from Professional Services (20% of turnover).
In the first half of the year we reported our first operating profits, and I am pleased to report that, despite ongoing investment in many areas, we are growing profitably, with earnings before interest, tax, depreciation and amortisation (“EBITDA”) of £2.053m, compared to a loss of £1.406m for the corresponding period for 1999.
During the quarter we have made a number of significant advances, both internally and externally, that are designed to help us continue to grow the business and develop its potential in an expanding and dynamic market. One of the most important is the ongoing expansion of our new ‘Futures Group’, staffed by a team comprising both highly-experienced industry figures and technology experts. The Futures Group has the objective of anticipating, analysing and understanding forthcoming market and customer requirements, and then prototyping and developing the products required to meet those demands.
On the international front, we continue to invest strongly in developing our sales in a number of key markets, including Western and Eastern Europe, Latin America, and Asia-Pacific. Notable achievements include the signing of new customers in Greece, Holland, Hungary and Jamaica. These include an affiliate of Vodafone, and a major national PTT. Success in these markets relies on investment in both sales and support infrastructure. New regional sales and support offices have been successfully launched in Poland, Malaysia and Brazil, giving us much stronger capabilities in these and surrounding territories. For example, one of the newest telecommunications companies in Brazil, Intelig, an affiliate of France Telecom, went live with the first interconnect billing implementation in the country, a project that was completed in just three months.
The telecoms industry is evolving steadily towards an Internet Protocol (IP)-influenced market, where customers will demand hybrid solutions that contain both switched and unswitched network support. We provide and deliver many of these capabilities today, and we are aggressively developing the technology and products to address future needs, including active membership of standard-setting bodies like the Internet Protocol Detail Records (IPDR) organisation. Our design and development teams in Woking and Cape Town give us a capability to cost-effectively roll out high-quality products that can be implemented with high levels of customer satisfaction.
We are also cooperating closely with other best-of-breed vendors to ensure we have the range of products and expertise that the market will demand well into the future. As one example of this, in June we announced a worldwide, bi-lateral, agreement with US-based Computer Generation Incorporated (CGI), a fully convergent (IP and voice) data collection and mediation company, to jointly market, sell and support both companies’ solutions. The combination of Intec’s well established InterconnecT billing solution and CGI’s Data Collection System (DCS) product will enable telcos to mediate and provide billing and settlement across IP, fixed line and mobile networks.Another major area of investment will naturally be in product development. Our current success in winning a wide range of customers, from small, entrepreneurial start-ups in new areas like IP telephony, through to major national PTTs, underlines the depth of capabilities and strong technology incorporated in our InterconnecT product family.
InterconnecT is recognised as the leading solution in the intercarrier biling market, and this position is continuously re-inforced by ongoing product development and improvement. Customer response to the many new capabilities introduced in the latest release, V6.05 of InterconnecT, has been very positive, and other members of the InterconnecT family, including InterconnecT ASP and InterconnecT ITU are operating with success in an increasing number of live customer sites.
Our business partners, influential companies in the telecoms sector like Logica and Hewlett-Packard, continue to be important contributors to our success, both in developing new business opportunities and in successfully completing installations of InterconnecT around the world.
Looking to the future we see every reason to be optimistic about our ongoing performance and leadership. Nevertheless, competition and market dynamics continue to keep us focused, and we do not forget that sustaining our leading position requires investment, initiative, intelligence and effort.
In June we announced the appointment of three highly experienced Non-executive Directors, Gordon Crawford, Dr Ceri James and Edward Astle, to add additional strength to our Board. The new Directors bring substantial experience of growing high-technology businesses internationally in a public company environment.
During the quarter, staff numbers grew from approximately 180 to 200 people, with most areas strengthening their teams. There continues to be pressure within the IT industry to recruit the best staff, but a combination of our increased profile as a public company, and an ongoing focus on providing a rewarding, open environment, allows us to hire the staff we require. All staff are incentivised with share options as part of their rewards package, and staff are encouraged to view long-term ownership of their shares as the best way to realise their personal investment in the Company.
Finally I would like to pay tribute to the Company’s staff and Directors, and our advisers, for their excellent contributions to our successful flotation. That we have been able to sustain our growth and financial performance during this busy period is testament to the strength of the team we have assembled, and it gives me great confidence in our future.
Mike Frayne, Executive Chairman.
Commenting on the results, Kevin Adams, Chief Executive Officer said: Intec Telecom Systems PLC was floated with great success on the London Stock Exchange (Symbol: ITL) on June 16th 2000 and listed as a techMARK company in the Quarter. Maintaining our revenue growth performance in the 3rd quarter during this busy time was an important achievement, which I believe it underlines the strength of our business model.
The business outlook continues to be very positive, with a large proportion of telecoms companies actively considering the introduction of new billing systems to support their increasingly complex and cost-sensitive operations. We have a strong pipeline of future opportunities, and we have confidence in our ability to win a significant proportion of these contracts in the marketplace.
We signed a number of important new customers in the 3rd quarter, including Panafon, one of Greece’s most innovative mobile telecoms companies, and a major national PTT. Like many software companies working with major corporate customers, revenue unevenness has historically been a challenge for us. We remain subject to contractual and customer operational factors outside of our control, and we therefore anticipate quarterly revenue unevenness to be a part of our operating environment for some time to come.
During the period under review, we were awarded 4 new contracts (all in countries not previously represented), giving us an installed base of 64 sites at June 2000, representing around twice as many customers as our nearest competitor.
Our strong cash position and our status as a listed company, combined with the leadership we have established in the intercarrier billing marketplace, means that we can continue to execute our long-term business development plan with great confidence. We continue to invest in the product development and global infrastructure that we believe are necessary to sustain our current success into the future.