Here's an announcement from ITG (GlobalWave) regarding preliminary results (note that the reference to WAVX is towards the middle under GlobalWave)(note also, the very last sentence):
INTERNET TECHNOLOGY GROUP PLC: Preliminary results for the year ended 31
Oct 97
-- Chairman's statement
FEB 12, 1998
Introduction
The past year has been ITG's first full year as an Internet company.
The tremendous growth of the UK Internet market has led to a
substantial rise in turnover at both of the Group's operating
subsidiaries in the year ended 31 October 1997. Against a background of sustained media coverage of Internet issues and a dramatic increase in the volume and quality of content, ITG has consolidated its position as one of the leading ISPs in the UK market.
Results
In the year ended 31 October 1997, ITG achieved significantly
increased turnover of 4.0m (1996: 0.4m) with a loss before taxation of
1.96m (1996: loss of 1.0 million). The most important feature of these
results was the substantial growth in the subscriber base, across both
the business and consumer markets served by ITG. However, at this stage in the Group's development, rapid growth in the subscriber base can only be achieved at significant cost, in order to finance continued investment in infrastructure and a sustained marketing campaign. Whilst impacting on short term profitability, this investment is required to achieve the critical mass necessary to take the Group forward to the next stage of its development. As for infrastructure, our policy of investing in state-of-the-art systems allows us to offer a consistently high level of service to our growing customer base.
The last financial year has been a period of investment, rapid
development and integration for the Group. The full benefits of our
substantial development will begin to come through in 1998 and beyond.
Cash Flow
The Board is pleased to report that it has adhered closely to its
plan for utilising the Group's cash resources. The funds realised from
property disposals have been invested in funding an effective marketing campaign and in extending the infrastructure to support the rapidly growing subscriber base. With Global Internet's practice of charging for subscriptions either 3 or 12 months in advance, the subscriber base is now generating enough cash on a monthly basis to pay for all operational expenses, including marketing.
Global Internet Global Internet, the Group's consumer ISP, had signed up over 43,000 subscribers by the year end, following a successful final quarter. Since the year end, that rate of growth has escalated and Global Internet has just reached 60,000 subscribers. Of these subscribers, over 8,500 are small and medium sized businesses, attracted by Global Internet's value for money proposition. Global Internet has set up a new department to sell a range of services to these companies and is deriving a growing income stream from this business sector.
GX Networks
In April 1997 the Group acquired Xara Networks Limited, an ISP
specialising in higher bandwidth connections to businesses. The
company, now renamed GX Networks, has significantly broadened ITG's
portfolio with a complementary set of Internet services. At the year
end, GX Networks had achieved annualised revenues of 1.35 million,
which have subsequently increased to an annualised rate of 2 million.
ITG has made a significant investment in GX Networks since
acquisition. Whilst greater than anticipated, the investment was
focused primarily on marketing, sales training and creating a new sales support infrastructure for the business. Moreover, it has resulted in GX Networks receiving ISO 9000 accreditation. Revenues for GX Networks were significantly behind plan for the first six months following acquisition which, together with the increased investment, adversely impacted the outcome for 1997. I am pleased to report that GX Networks' business has improved significantly during the past three months and I am confident that the business will make an important contribution to Group revenue in 1998 and beyond.
Investments
As I reported in our Interim Statement, the Company has disposed of
nearly all its property assets. The funds released by these disposals
during the financial year have been invested in expanding the core
Internet business.
I have also previously referred to two other investments, Xaar and
Redstone Telecom. In October 1997, Xaar was successfully floated on the London Stock Exchange, a flotation which valued our investment at
approximately 1.6 million - twice what we paid for it. Redstone Telecom remains unlisted but, following a recent round of private financing, our stake has been valued at just over 1 million - a premium of 50% to its purchase price.
GlobalWave
In July 1997, ITG set up GlobalWave, a joint venture with Wave
Systems Corporation ("Wave"). GlobalWave is 75% owned by ITG with the
remaining 25% held by Wave. GlobalWave is an electronic commerce
company, which has been established to exploit a new technology for
metering digital content. At the heart of the technology is a
microprocessor chip, the WaveMeter (r), which can be used to buy, sell
or rent any information which can be stored digitally. It has profound
implications, not only for selling information over the Internet, but
also for distributing software, music, video and much more. More detail about Wave's technology can be found on the Wave website: www.wave.com.
Under the terms of the joint venture, ITG agreed to pay Wave a
licence fee of US$1 million with a further US$4 million potentially
payable on the achievement of certain milestones. These milestones
related to specific agreements which would guarantee the widest
possible distribution - and therefore the success - of the WaveMeter
(r). One such major agreement was recently announced with IBM
Corporation and discussions are at an advanced stage with other major
technology companies. Following the agreement reached with IBM, ITG has made a further licence payment of US$750,000 and a schedule of payments for the balance of US$3.25 million has been agreed, dependent upon achieving further specific milestones.
The GlobalWave joint venture has attracted considerable interest from
several quarters and this has in turn provided a number of options for
financing both ITG's contingent licence payments and raising adequate
operating capital for the business in its formative stages.
Strategic Alliances
Capital Radio
The agreement with Capital Radio plc, announced on 1 July 1997,
presents an exciting opportunity for the Group. Capital Radio, together with its associated radio stations ("the Capital Radio Group"), have decided to offer an Internet access service to their listeners and have chosen Global Internet to be the service provider. I am confident that the combination of Global Internet's quality and value proposition and the media reach of the Capital Radio Group, with its strong branding and extensive listener base, will prove a great success and add considerably to the Group's subscriber numbers.
Microsoft
When I wrote to you last year, I mentioned that ITG had just signed a
bilateral agreement with Microsoft. This involved Global Internet
distributing Microsoft's browser software to all its subscribers and
Microsoft providing a simple route from every new Windows(tm) desktop
to enable its customers to sign up with Global Internet. ITG has built
upon this mutually beneficial arrangement by signing a further
agreement with Microsoft specifically targeting small businesses with a combination of Microsoft's Small Business Server and Global Internet's ISDN based connectivity products.
Current Trading and Prospects
Since the end of our financial year, our subscriber base has been
growing at an average monthly rate of 10.5 per cent. and, as mentioned
above, we have now achieved a level of over 60,000 subscribers. The
fact that the use of the Internet, both by individuals and businesses,
is still forecast to grow significantly in the foreseeable future gives us great confidence that we can continue to build on this excellent start. Coupled with our strategy of continuing to invest in
infrastructure and our sustained marketing campaign, we believe that we can continue to consolidate our position as one of the UK's leading
ISPs. With the encouraging progress being made by our joint venture,
GlobalWave, we believe that the final years of this millennium will be
an exciting time, both for ITG and for the Internet market as a whole. |
