FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of February, 2003
QXL ricardo PLC
Landmark House
Hammersmith Bridge Road
London W6 9EJ
United Kingdom
Tel: 44-208-962 7100
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.)
Form 20-F..X.. Form 40-F.....
(Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934.)
Yes ..... No ..X..
(If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- ________ )
QXL ricardo plc
Landmark House
Hammersmith Bridge Road
London W6 9EJ
T: 020 8962 7231 F: 020 8962 7212
PRESS RELEASE
QXL ricardo plc - Third Quarter Results 14 February 2003
Continued Improvements in Trading Position
Update on Polish Situation
QXL ricardo plc ("QXL" or the "Group"; LSE: QXL.L; Nasdaq: QXLC), the
pan-European online auction company, today announces results for the third
quarter ended 31 December 2002.
Third Quarter ended 31 December 2002 - Operating and Financial Highlights
- - Transaction volumes increased 114% over the quarter ended 31 December
2001.
- - Gross profit decreased 8% over the quarter ended 31 December 2001 to
GBP1.3 million as a result of lower advertising revenues, partially offset by
higher gross profit from transactions
- - Operating expenses reduced 47% over the quarter ended 31 December 2001
to GBP3.6 million
- - Trading loss decreased 57% over the quarter ended 31 December 2001 to
GBP2.3 million.
- - New shares in QXL Poland sp z.o.o ("QXL Poland") were issued without
the Company's knowledge. The Company has initiated a legal process in Poland in
an attempt to recover control of the business and these shares, representing 92%
of QXL Poland.
Commenting on the results Mark Zaleski, Chief Executive Officer, said:
"These results reflect another solid quarter for QXL in which we have continued
to show a strong increase in our transaction volumes whilst further reducing
operating expenses. We have continued to progress well this quarter in
restructuring our technology operations and expect the benefit of this to become
clear in following quarters through lower costs and increased transaction levels
from a faster and enhanced customer proposition."
QXL ricardo plc
Mark Zaleski, Chief Executive Officer
Robert Dighero, Chief Financial Officer
Tom Parkinson, Company Secretary +44 20 8962 7231
Financial and Operating Data Highlights
(UK GAAP)
Quarter Ended Quarter Ended 9 Months Ended 9 Months Ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
GBP'000 GBP'000 GBP'000 GBP'000
Turnover 1,304 1,459 4,228 4,171
Gross Profit 1,298 1,410 4,198 3,624
Trading loss (2,290) (5,357) (8,154) (20,025)
Loss on ordinary activities (4,051) (7,120) (14,246) (25,705)
Reconciliation of Trading loss to Loss on ordinary activities
Quarter Ended Quarter Ended 9 Months Ended 9 Months Ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
GBP'000 GBP'000 GBP'000 GBP'000
Trading loss (2,290) (5,357) (8,154) (20,025)
Goodwill amortisation (1,788) (1,848) (5,363) (6,121)
Reversal of VAT provision 55 - 431 -
Restructuring costs - - (1,258) -
Total operating loss (4,023) (7,205) (14,344) (26,146)
Net interest receivable (28) 85 98 441
Loss on ordinary activities
before taxation (4,051) (7,120) (14,246) (25,705)
Chief Executive Officer's Review
Underlying growth
We were very pleased by another quarter of strong growth in transaction volumes,
increasing 31% over last quarter and 114% year-on-year. We expect to see
continued growth in this metric, which we believe indicates the underlying
strength of our business. We also saw a decrease in average transaction value
from approximately GBP29 in the previous quarter to approximately GBP24 as we
continue to see a shift in the product mix on our site and also in our
geographic mix.
We remain focussed on improving our core product in order to enhance the
customer experience. We have also been using this review process as an
opportunity to restructure our technology operations to reduce costs. Overall
we believe the resulting product will be faster and more intuitive providing a
stronger basis for future growth.
Reduced losses
For the ninth successive quarter we have reduced trading loss with a 16%
decrease over the previous quarter and a 57% decrease over the quarter ended 31
December 2001. In particular as outlined above during the quarter we continued
to restructure our technology operations, which should result in significantly
lower costs going forward. In future quarters we will increasingly focus on
general and administrative costs and expect to be able to achieve significant
cost savings in this area.
We are also looking closely at the costs associated with our listed status. We
believe that the current benefits of remaining listed on Nasdaq and being
subject to US reporting requirements are outweighed by the administrative,
regulatory and insurance costs involved, especially as the Company's share
trading volumes on the Nasdaq market are significantly lower than has been the
case in the past. We are therefore considering consolidating our share capital
and de-listing from Nasdaq in order to reduce these costs.
Country operations
Our country operations continued to improve trading with the majority of our
countries now close to or at local operational profitability. We expect all of
our material country operations to achieve local operational profitability in
the next few months. This quarter we were particularly pleased with the
development of our Scandinavian businesses following the launch of the co-brand
auction service with Yahoo in Norway, Sweden and Denmark. Our Swiss business
also performed well achieving profitability in a competitive market and our
Polish business showed a strong operating performance.
Poland update
With respect to QXL Poland, the Company has been made aware that new shares in
this subsidiary were issued to a company called NIAA sp z.o.o. without the
Company's knowledge. The Company has initiated a legal process in Poland in an
attempt to recover control of the business and these shares, representing 92% of
QXL Poland. It is likely that reaching a conclusion to this process will take
some time. Depending on developments over coming months, the Group may be
required to exclude QXL Poland from its consolidated accounts for the quarter
ending 31 March 2003 and possibly beyond.
QXL's transactional growth and cashflows would be materially impacted in the
event that QXL Poland were not consolidated into the Group's numbers going
forward. In the quarter ended 31 December 2002, QXL Poland reported a turnover
of GBP318,000 (2001: GBP161,000), gross profit of GBP305,000 (2001: GBP149,000)
and an operating loss of GBP26,000 (2001: GBP171,000). Had it been necessary
to deconsolidate the subsidiary from our consolidated position as at 31 December
2002, group net assets would have been reduced by approximately GBP270,000.
Notwithstanding the issues surrounding QXL Poland, we continue to expect the
Group to be able to progress towards profitability without recourse to further
fund raising.
Financial Review
The Group's third quarter results show continued reductions in trading loss and
loss on ordinary activities before taxation compared to the previous quarter.
For the quarter ended 31 December 2002, the Group completed agency-based
auctions of merchandise and services with an aggregate gross auction value of
GBP29.2 million, a 19% increase in the value of agency-based auctions over the
quarter ended 31 December 2001 and a 7% increase over the quarter ended 30
September 2002.
Turnover for the quarter ended 31 December 2002 decreased 11% to GBP1.30 million
from GBP1.46 million for the quarter ended 31 December 2001. This was primarily
due to a decrease in advertising revenues partially offset by an increase in
more predictable transactional revenues.
Cost of sales remained negligible at GBP6,000 for the quarter ended 31 December
2002, compared to GBP49,000 for the quarter ended 31 December 2001.
Gross profit for the quarter decreased 3% to GBP1.30 million from GBP1.33
million in the quarter ended 30 September 2002 and decreased 8% from GBP1.41
million in the quarter ended 31 December 2001. This decrease was broadly in
line with the decrease in turnover.
Sales and marketing expenses (excluding goodwill, exceptional items and bad debt
provisions) decreased 3% to GBP1.80 million for the quarter ended 31 December
2002, from GBP1.85 million for the quarter ended 30 September 2002 as the result
of further optimisation of our marketing activities and decreased 51% from
GBP3.66 million in the quarter ended 31 December 2001. Bad debt provisions
decreased 30% to GBP78,000 from GBP112,000 in the quarter ended 31 December
2001.
Technology and development costs (excluding exceptional items and goodwill)
decreased 32% to GBP597,000 in the quarter ending 31 December 2002 from
GBP878,000 in the quarter ended 30 September 2002 and decreased 60% from GBP1.5
million in the quarter ended 31 December 2001. This decrease resulted primarily
from the ongoing restructuring of our technology platforms.
General and administrative costs (excluding exceptional items) increased 12% to
GBP1.1 million in the quarter ended 31 December 2002, from GBP1.0 million in the
quarter ended 30 September 2002 and decreased 25% from GBP1.5 million in the
quarter ended 31 December 2001. The year-on-year decline was due to a continued
rationalisation of overhead costs. The increase over the previous quarter was a
result of restructuring costs, which should result in lower general and
administrative costs going forward.
Goodwill charges in the quarter ended 31 December 2002 amounted to GBP1.8
million, which was the same as for the previous quarter but a reduction from
the figure of GBP2.3 million for the quarter ended 31 December 2001.
Trading loss (Operating loss before goodwill and exceptional items) in the
quarter ended 31 December 2002 decreased 16% to GBP2.3 million from GBP2.7
million in the quarter ended 30 September 2002 and decreased 57% from GBP5.4
million in the quarter ended 31 December 2001.
Losses on ordinary activities before taxation in the quarter ended 31 December
2002 were GBP4.1 million compared to losses of GBP5.3 million in the quarter
ended 30 September 2002 and GBP7.1 million in the quarter ended 31 December
2001.
On 4 February 2003, the Company issued 23,938,296 Ordinary Shares pursuant to
the conversion of GBP120,000 of Convertible C Bonds.
During the quarter the Group did not issue any shares pursuant to its GBP15
million Equity Commitment and has not done so now for almost a year. GBP10.67
million of the Equity Commitment remains outstanding although, as published
previously, the Company's ability to draw on the Equity Commitment depends on a
number of factors including certain Bondholders interpretation of the agreement,
its share price and share trading volumes, which are likely to restrict the
actual amounts that can be drawn. In addition, as at 31 December 2002, the
Group had available cash reserves of GBP4.4 million.
Current Trading and Outlook
Trading loss has improved on a quarterly basis for the last nine quarters as we
continue to increase transactional revenues and reduce operating costs.
Transactional volumes also increased strongly in the quarter.
The majority of our countries are now at or close to local operational
profitability and we expect all of our material country operations to achieve
local operational profitability in the next few months, resulting in a positive
impact on our operating cashflow.
However, despite these positive indicators, we are very conscious of the level
of competition we face in many of our markets and of our overall cash position.
In addition, the recent third party claim to 92% ownership of QXL Poland may
impact our transactional growth and cashflows in the coming quarters.
Consequently while we continue to expect the Group to be able to progress
towards profitability without recourse to further fund raising, this could be on
the basis of slower revenue growth than previously anticipated.
QXL ricardo plc
Consolidated profit and loss account
Third Quarter Results - UK GAAP
Quarter Quarter 9 Months 9 Months
Ended Ended Ended Ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
Unaudited Unaudited Unaudited Unaudited
GBP'000 GBP'000 GBP'000 GBP'000
Turnover
Operations before acquisitions 1,206 1,459 4,048 4,171
Acquisitions 98 - 180 -
Continuing operations 1,304 1,459 4,228 4,171
Cost of sales (6) (49) (30) (547)
Gross profit 1,298 1,410 4,198 3,624
Distribution costs (3,664) (6,057) (13,169) (20,408)
Administrative expenses (1,657) (2,558) (5,373) (9,362)
Operating loss
Operations before acquisitions (3,836) (7,205) (13,948) (26,146)
Acquisitions (187) - (396) -
Continuing operations (4,023) (7,205) (14,344) (26,146)
Net interest receivable (28) 85 98 441
Loss on ordinary activities before
taxation (4,051) (7,120) (14,246) (25,705)
Minority interest 2 123 52 1,313
Retained loss (4,049) (6,997) (14,194) (24,392)
Operating Expenses above analysed as:
Sales and marketing (1,798) (3,660) (6,291) (12,476)
Bad debt provision (78) (112) (776) (932)
Restructuring costs - S&M - - (739) -
Goodwill amortisation - S&M (1,788) (2,285) (5,363) (7,000)
Distribution costs (3,664) (6,057) (13,169) (20,408)
General and administrative (1,115) (1,494) (3,137) (4,478)
Goodwill amortisation - technology &
development - 437 - 878
Technology & development (597) (1,501) (2,148) (5,847)
Restructuring costs - technology &
development - - (519) -
Reversal of VAT provision 55 - 431 -
Share based compensation - - - 85
Administrative expenses (1,657) (2,558) (5,373) (9,362)
QXL ricardo plc
Consolidated profit and loss account
Third Quarter Results - UK GAAP
Quarter Quarter 9 Months 9 Months
Ended Ended Ended Ended
31 December 31 December 31 December 31 December
2002 2001 2002 2001
Unaudited Unaudited Unaudited Unaudited
Loss per equity share (basic and diluted)
Loss after taxation (GBP '000) (4,049) (6,997) (14,194) (24,392)
Weighted average number of ordinary
shares outstanding ('000) 891,325 725,284 868,640 714,017
Net loss per share (basic and diluted) -
pence (0.5) (0.9) (1.6) (3.3)
Statement of total recognised gains and losses
Retained loss (4,049) (6,997) (14,194) (24,392)
Exchange adjustments (99) 35 (202) (545)
Total recognised loss for the period (4,148) (6,962) (14,396) (24,937)
QXL ricardo plc
Consolidated Balance Sheet -UK GAAP
31 December 31 December 31 March
2002 2001 2001
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Fixed assets:
Intangible assets 5,364 15,630 10,727
Tangible assets 448 4,204 1,050
Investments - 30 25
5,812 19,864 11,802
Current assets:
Stock 31 56 34
Debtors and prepayments 3,139 4,972 3,656
Cash at hand and at bank 4,391 17,547 14,093
7,561 22,575 17,783
Creditors: amounts falling due within 1 year (3,147) (5,767) (5,200)
Net current assets: 4,414 16,808 12,583
Total assets less current liabilities 10,226 36,672 24,385
Creditors: amounts falling due after 1 year (29) (73) (91)
Convertible bonds (14,562) (15,161) (14,632)
Net assets (4,365) 21,438 9,662
Called up share capital 891 770 837
Share premium account 225,846 224,487 225,637
Merger reserve 9,137 9,137 9,137
Profit & loss account (239,612) (211,903) (225,216)
Total equity shareholders' funds (3,738) 22,491 10,395
Equity minority Interest (627) (1,053) (733)
Deficit / capital employed (4,365) 21,438 9,662
QXL ricardo plc
Consolidated Cashflow Statement - UK GAAP
9 Months 9 Months Year
Ended Ended Ended
31 December June 31 December 31 March
2002 2001 2001
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
Net cash outflow from operating activities (10,151) (20,037) (24,468)
Returns on investment and servicing of finance 311 762 1,002
Capital expenditure and financial investment (111) (281) (209)
Acquisitions - (243) -
Cash outflow before management of liquid (9,951) (19,800) (23,675)
resources and financing
Management of liquid resources - 13,042 13,042
Financing 249 13,062 13,518
Increase / (decrease) in cash (9,702) 6,304 2,885
Background on QXL ricardo
QXL ricardo plc ("QXL") is a pan-European online auction community, conducting
online auctions in eleven languages. The QXL online auction community
facilitates trading 24 hours a day, seven days a week in an efficient,
convenient and entertaining environment, enabling buyers to bid on merchandise
and services from across Western Europe which are sold by QXL members and
merchants. QXL also enables sellers to locate and trade with buyers in new
geographic markets. A wide selection of merchandise and services is available on
its online auction community, ranging from computer software and hardware,
consumer electronics, household appliances and collectibles to travel-related
items and sports equipment. QXL is a publicly traded company with its shares
listed on the Official List of the United Kingdom Listing Authority and the
Nasdaq National Market.
QXL provides access to the QXL trading community in:
UK - www.qxl.com and www.qxl.co.uk; Germany - www.ricardo.de; France -
www.aucland.fr; Italy - www.qxl.it; Netherlands - www.ricardo.nl; Norway -
www.qxl.no; Denmark - www.qxl.dk; Spain - www.aucland.es; Poland -
www.allegro.pl; Sweden - www.qxl.se; Finland - www.qxl.fi; Switzerland -
www.ricardo.ch
This press release may contain forward-looking statements that relate to the
Company's plans, objectives, estimates and goals. The Company's business is
subject to numerous risks and uncertainties, including risks associated with:
funding requirements; acquisitions; only having a limited operating history;
regulation of auctions and the Internet; probable variability in the Company's
quarterly operating results; the Company's results of operations not being
indicative of future performance; significant losses being incurred as a
result of expansion of the Company's business; dependence on growth of online
commerce market; risks associated with development and growth of the
Company's foreign language web sites; intense competition; failure to develop
the Company's brand; failure to expand the Company's systems; risks associated
with managing internal growth and retaining and recruiting personnel;
international expansion; online commerce security; risks associated with not
developing new services, features and functions; risks associated with
intellectual property rights; fraudulent activity of our members and
suppliers; and seasonality. These and other risks and uncertainties, which are
described in more detail in the Company's Registration Statement dated 7
October 1999, on Form F-1 and Annual Report dated 27 August 2002 on Form 20-F
filed with the US Securities and Exchange Commission and in the Company's
prospectuses and listing particulars filed with the UK Listing Authority and
the Registrar of Companies in England and Wales (the most recent being dated
18 March 2002), could cause the Company's actual results and developments to
be materially different from those expressed or implied by any of these
forward-looking statements.
QXL ricardo PLC
Date 14 February 2003 By:___/s/ Tom Parkinson___
Tom Parkinson
General Counsel and Company Secretary