Demon Internet Limited stock issue values Demon at 26.7 million pounds.
Demon, established in 1992, is the leading Internet provider in the UK, and currently commands a 65 per cent share of the market. As at 1st October 1995, Demon had 45,000 dial-up subscribers, including private individuals, corporates, and government departments; the company is currently experiencing dramatic growth in its customer base which is expanding at 8 per cent per month (net, after cancellations).
Demon has achieved this leading market position by providing Internet access at local call rates for 80 per cent of the UK population and the company plans to achieve 100 per cent coverage by November 1995. Demon anticipates a further rapid increase in the number of subscribers seeking access to the Internet. The funds raised via the issue will be invested to take full advantage of this growth trend, including the expansion of its Network Operations Centre in Finchley, North London to accommodate 4,000 modems by the year end, the recruitment of additional sales staff and the development of the company's operations in Continental Europe. Following the opening of an office in Amsterdam earlier this year, the group plans to launch its operations in France and in the Netherlands early in 1996.
Unaudited figures show that Demon achieved a pre-profit of GB 353,000 pounds (USD $554,000) on turnover of GB 2.76 million pounds (USD $4.33 million) in the year to 30th April 1995 compared to GB 65,000 pounds (USD $ 102,000) on turnover of GB 472,000 pounds (USD $ 741,000) in the previous year. The current customer base of 45,000 subscribers, together with leased lines for corporate customers and sales of other services, represents annualized recurring revenues of GB 6.7 million (USD $ 10.5 million).
Demon was founded by Cliff Stanford (41), the current chairman and chief executive. Stanford has over 15 years experience as a pioneering programmer for Internet related services. Giles Todd (39), technical director, is responsible for the development and maintenance of the company's network infrastructure.
Commenting on the transaction, Stanford said:
"We are delighted at the reception we have had from the venture capital community in raising these funds. Demon is currently experiencing prodigious growth -- our subscriber base grew by 400 per cent during the last financial year alone -- so we are confident that this fresh capital will allow us to drive forward our subscriber base in the UK and in Continental Europe.
"We believe that the next five years will be very exciting for Demon. Independent commentators believe that the total Internet subscriber base will grow by 200-300 per cent per year during that period. This stock issue will ensure that Demon will play a leading role in the worldwide provider market and reap the rewards of our strong position in the Internet market."
The Internet is a collection of computers and computer networks, which allows subscribers to communicate with an estimated 30 million users worldwide. Connection to the Internet enables Demon's subscribers to access information provided by commercial, educational and government computer systems throughout the UK and around the world. Services include:
- electronic mail and file transfer between companies,
organizations, academics and individuals;
- remote access to the many commercial subscription and public
- the exchange of news and information through thousands of
electronic bulletin boards or discussion groups;
- the transfer of multimedia applications; and
- providing companies with a managed corporate data network
Between June 1992 and September 1995, the Group built its subscriber bases as an Internet provider from an initial base of 200 subscribers in June 1992 to approximately 45,000 dial-up subscribers as of October 1, 1995. Initially, the Group was re-selling services provided by Pipex and UKNet and was operating with one computer and eight telephone lines. Subscribers wishing to access the Internet then dialled Demon's computer for the price of a UK national call, the cost of which depended on the distance between the subscriber and the computer as well as the length of time spent accessing the Internet.
In September 1992 Demon established its first Point of Presence ("POP") in the North West of England which allowed subscribers in that area to access the Internet at local call rates. Additional POPs were subsequently established by the end of 1994 the Group had 7 POPs providing local call rate access across the UK with some 300 telephone lines from its facility in North london. In April 1993, as demand for dial-up services increased, Demon installed the first its dedicated transatlantic links, thus transforming Demon into an Internet provider in its own right.
In December 1994, Demon International Limited reached agreement with Energis Communications Limited to pioneer "VPOPs" which have now replaced most POPs. Local call rate access through VPOPs is now available in 300 towns and cities in the UK. Demon expects to achieve 100 percent coverage of the UK by the end of November 1995. The Group currently has some 1.,600 modems at its Network Operations Centre in Finchley.
Year ended April 30, 1994 1995 000 pounds 000 pounds
Turnover 423 2,759 Cost of sales (104) (1,069) Gross margin 319 1,690 Administrative expenses (255) (1,343) Operating profit 64 347 Net interest receivable 1 6 Profit before tax 65 353
Note: The figures above do not include the results of CityScape which was acquired on Sept. 29, 1995.
Cliff Stanford, aged 41 Chairman and Managing Director Cliff Stanford has over 15 years experience as a pioneering programmer for Internet related services. He trained as an accountant with AW Mudd & Co. He founded Demon through Demon Internet Services in April 1992 and Demon Internet Limited in August 1992. He has been responsible for growing the subscriber base of Demon from 200 subscribers in June 1992 to approximately 45,000 dial-up subscriber in September 1995. He is widely regarded as a leading authority on the Internet and as a pioneer in providing Internet services in the UK. At Demon Cliff Stanford is Chairman and Managing Director with overall responsibility for the Group's operation.
Giles Todd, aged 39 Technical Director Giles Todd has been involved with the computer industry since 1979 and has extensive experience in telecommunications and networking. Prior to joining Demon, he was Managing Director of Rundart Limited, a software consultancy. Since January 1995, he has been responsible for the maintenance and development of Demon's network infrastructure.
Durlacher Limited Durlacher Limited is an independent stockbroking firm with an institutional and private investor clientele and a strong corporate fiance and share placement division. Durlacher Multimedia Limited specializes in producing in-depth multimedia research, recent examples of which include the first detailed European study into the computer and video games market and the British Film industry, and shortly to be published, an in-depth investigation into the investment potential offered by the Internet.
Apax Partners & Co. Apax Partners is an independent investment group providing private equity funding and corporate finance to entrepreneurial businesses in Europe and the USA. The group manages 1.5 million pounds worldwide (500 million pounds in the UK) raised from leading institutions internationally. Investments cover early stage, expansion capital, management buy-outs and buy-ins and turnarounds. Industry sector specializations include media, retailing, biotechnology, electronics, telecommunications and engineering.
CONTACT: Demon Internet Limited
Cliff Stanford/James Gardiner
Email: Cliff@demon.net or James@demon.net
Geoffrey Chamberlain, 44 (0)171-628-4306
Chris Cosentino, 212/546-2687
Rupert Ashe/Liz Anderson, 44 (0)171-600-1392
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|Date:||Oct 17, 1995|
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