Interim Results for the six months ended 30 September 2002
ID Data, the provider of secure smart card based transaction systems and services to the international telephony, banking, retail and secure access sectors, today reports its interim results for the six months ended 30 September 2002.
· Turnover for the first half of the year of £10.4 million, an increase on the same period in the previous year of 45%.
· Loss before exceptional costs reduced to £1.3 million from a loss of £2.8 million for the same period last year.
· The period includes the launch of the Nectar loyalty card with a sales value of £4.4 million.
· ‘Origin J’ Java™ smart card product now in evaluation stage with a number of the major network operators.
Commenting on the Interim results, Peter Cox, Chief Executive of ID Data plc, said:
“Despite overall market conditions ID Data is the only quoted company in the Smart and associated card sector to demonstrate real growth and improved profitability during this period.”
I am pleased to be able to report an improved performance in the first half of our financial year. Turnover increased by 45% to £10.4 million (2001: £7.2 million) while the loss before tax decreased by more than half to £1.29 million (2001: £2.78 million). The Company had some notable contract wins during the period.
ID Data continues to focus on three specific marketplaces –retail, banking and telecommunications. Each exhibits markedly different dynamics.
The retail sector is the traditional heart of the business and the one which has underpinned these interim results. Most notably the Company supplied all the Nectar cards to Sainsbury’s, Barclaycard, BP and Debenhams for the launch of this new loyalty card. Follow-on orders, together with continuing demand from existing retail clients such as Tesco and the AA, will benefit the second half.
In banking the migration to chip cards and EMV cards (Europay, Mastercard and Visa) is moving at an evolutionary pace and slower than originally envisaged. TTi, our joint venture with Toshiba and Toppan, of which ID Data owns 43%, gained a contract via EDS to supply cards to the Post Office’s Universal Bank. This contract is expected to be worth up to £8 million over the contract period. New orders from two other UK banks will also help our position. Moreover, the first installation of our SpanKey bank-card security product, at Abbey National, is further evidence of our progress in this sector. SpanKey is a leading-edge mainframe solution aimed at improving the security of card products.
In telecommunications sentiment is depressed. Operators are cutting back on investment and delaying the implementation of new technologies such as 3G mobile. Despite that overall picture, there are areas of the world where strong growth in mobile networks is still being seen. These areas were targeted some 12 months ago and sales in Africa have started to come through.
Manufacturing and direct marketing reside in ID Data Systems Limited. The necessary preparatory work has been carried out, progressively to rationalise production facilities at our three sites. The already announced intention to close one site was delayed by the high level of activity associated with the retail card business. However, the implementation of staff reductions is calculated to reduce the annual wage bill by £1.1 million, albeit the impact will start to show through only in the final quarter of this financial year.
ChipPort Limited is tasked with licensing our know-how to card manufacturers throughout the world. Progress continues in building up the number of prospective partners. Our proposition was well received at the International Card Manufacturers Association conference, held in September, but we still await the first licence deal.
Similarly, in the Technology division the groundwork continues in our plans to source and develop card-based and associated applications. The development of the Origin-J full Java product for smart cards was completed during the period. The product is now being evaluated by a number of major companies in the telecommunications, banking, smart-card and silicon manufacturing sectors. Licence fees will commence in 2003.
During the period there was a net cash inflow of financing totalling £5.3 million. This included a placing of 88.5 million shares raising £3.8 million and an increase in trade finance debt of £2.3 million. £0.8 million was repaid on finance leases. The funds raised were largely utilised by a £4.3 million increase in working capital primarily associated with the Nectar project. Debtors increased by £3.2 million but are covered by a £4.5 million bank guarantee.
Immediately prior to issuing these accounts a share transfer agreement was entered into with the New Opportunities Investment Trust plc (NOIT) under which 36,363,636 new shares in ID Data plc were exchanged for 2 million new shares in NOIT which can be traded in the stock market after a short, initial lock-in period, plus 400,000 warrants.
Board and Management
Since the period end, Richard Allnutt has tendered his resignation from the Board due to increasing demands of work in his role as Group Counsel of Fujitsu Services. His expertise and wisdom will be missed and the Board is very grateful for the significant contribution he has made to its deliberations. Equally the Board appreciates the efforts of all the staff, who have contributed to the Company’s performance in difficult times and trying circumstances.
We view the future with appropriate caution, based on our assessment of the current situation in the industry overall. All our major publicly quoted competitors have reported lower sales against their comparative periods and are recording significant losses. Signs of a general upturn are not presently visible. It is to be hoped that the recent cut in US interest rates will revive the global economy and generate the confidence to make investment decisions in our sectors of activity. Meanwhile the Board continues to evaluate the future of all our business streams with the intention of moving towards profitability.
For further information, please contact:
ID Data plc Tel: +44 (0) 1536 207 000
Peter Cox, CEO
Nick Martin Tel: +44 (0) 20 7459 3600
Bankside Consultants Limited
Peter Curtain / Heather Salmond Tel: +44 (0) 20 7444 4140
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